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ELEMENTS 



OF 



POLITICAL ECONOMY. 



WITH ESPECIAL REFERENCE TO THE 



INDUSTRIAL HISTORY OF NATIONS. 



ROBERT ELLIS THOMPSON, M.A., 

PROFESSOR OP SOCIAL SCIENCE IN THE UNIVERSITY OP PENNSYLVANIA, 
AND MEMBER OF THE AMERICAN PHILOSOPHICAL SOCIETY. 



''XA 



\) 



"The true greatness of kingdoms and estates, and the means thereof, is an argu- 
ment fit for great and mighty princes to have in their hand ; to the end that 
neither by overmeasuring their forces, they lose themselves in vain enterprises, 
nor on the other side, by undervaluing them, they descend to fearful and pusillan- 
imous counsels." — Lord Bacon, 



PHILADELPHIA 



PORTER & COATES. 

1882. 




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Copyright by Poeter & Coates, 1875. 



Copyright by Porter & Coates, 1882. 



PREFACE. 



This work forms a third and revised edition of the author's 
" Social Science and National Economy," published in 1875, 
and in a revised edition in the following year. The author 
retains his preference for the earlier title, but the general use 
of the term Political Economy to designate this science ren- 
ders it desirable to make this change. 

The author of this book has had a twofold purpose in its 
preparation, — -first, to furnish a readable discussion of the 
subject for the use of those who wish to get some knowledge 
of it, but have neither the time nor the inclination to study 
elaborate or voluminous works ; secondly, and more especially, 
to provide a text-book for those teachers — in colleges and else- 
where — ^who approve of our national policy as in the main the 
right one, and who wish to teach the principles on which it 
rests and the facts by which it is justified. Of course the 
book is not exactly what it would have been had either of 
these purposes been kept singly in view. Some explanations 
are given, which are here only because this is meant to be a text- 
book ; there are discussions of a political kind, for instance, 
in the second chapter, whose presence is necessitated by the 
fact that no specific instruction in political philosophy is 
ordinarily given in our college courses, and the teacher of 

5 



6 PREFACE. 

National Economy cannot always assume that his classes are 
already familiar with the conception of the state in its full 
significance. On the other hand, in the closing chapters, what 
the theological controversialists used to call "the present 
truth " has been stated and defended with a fulness which 
would ordinarily be needless in a text-book, and it is sug- 
gested that in the use of those chapters a selection be made, 
and the rest omitted. But it is believed that nothing has been 
inserted, and it is hoped that nothing has been omitted, whose 
insertion or omission will interfere with either purpose of the 
book. 

The form of the book is entirely different from the ordinary 
arrangement under the three rubrics, " Production, Distribu- 
tion and Consumption." The method pursued of itself ex- 
cludes that artificial and symmetrical distribution of its parts , 
which — the author believes — sacrifices life and reality to 
system. AVhatever interest or other merits the book possesses 
it owes to the method which underlies its construction. In so 
far as the author has succeeded in being faithful to that 
method, he must have succeeded also in showing that this 
science is not one that is " up in the clouds," but one that 
touches on human life and the world's history at all points. 

The author has had access to the library of the late Stephen 
Col well, Esq., now in possession of the University, and only 
regrets that he has not been able to use its treasures more 
freely. It contains some eight thousand books and pamphlets, 
whose collection occupied Mr. Colwell's leisure till his death in 
1869, and it embraces nearly every important book, periodical 
or pamphlet on the subject, that had appeared in the English, 
French or Italian languages, besides a large number in German 
and Spanish. 

Of the books that the author has drawn upon, the writings 
of Mr. Henry C. Carey hold the first place. Then come those 



PREFACE. 7 

of his school — Dr. Wm. Elder, Hon. E. Peshine Smith (es- 
pecially in chapter III.), Dr. E. Diihring (chapter I.) and 
Stephen Colwell (chapter VIII.). Free use has also been made 
of the writings of Sir Henry S. Maine and Rev. E. Mulford 
(chapter II.), W. R. Greg (chapter IV.), Cliffe Leslie, Maine, 
and E. Laveleye (chapter V.), W. T. Thornton (chapter VII.), 
R. H. Patterson (chapter VIII,), J. Noble (chapter IX.), and 
Edward Young (chapter XII.). Other authorities are specified 
in the notes appended to various paragraphs. 

For the correction of many small and some large errors, 
and for suggestions which have contributed to whatever com- 
pleteness of discussion or other merits the book possesses, the 
author is greatly indebted to the kindness of Cyrus Elder, 
Esq., of Johnstown, to Joseph Wharton, Esq., and especially 
to his friend Wharton Barker, Esq., to whose encouragement 
this book owes its existence. 

University of Pennsylvania, 



CONTENTS. 



CHAPTER I. 

PAGE 

Definition and History of the Science 11 



CHAPTER n. 
The Development of Society. — The Nation 32 

CHAPTER III. 
Wealth and Nature 41 

CHAPTER IV. 
The Science and Economy of Population 49 

CHAPTER V. 
The National Economy of Land 70 

CHAPTER VI. 

The National Economy of Land {continued). — How 
the Earth was Occupied 101 

CHAPTER VIL 
The National Economy of Labor 115 

CHAPTER VIII. 
The Science and Economy of Money 142 

9 



IP CONTENTS. 

CHAPTER IX. 

PAOB 

National Economy of Finance and Taxation 179 

CHAPTER X. 
The Science and Economy of Commerce 197 

CHAPTER XI. 

The Science and Economy of Manufactures. — The 
Theory 219 

CHAPTER XII. 

The Science and Economy of Manufactures. — The 
Practice 267 

CHAPTER XIII. 

The Science and Economy of Intelligence and 
Education 365 



ELEMEi:^TS 



OF 



POLITICAL ECONOMY. 



CHAPTER FIRST. 
Definition and History of the Science. 

§ 1, Political or National Economy is that branch of the 
science of man which treats of man as existing in society, and 
in relation to his material wants and welfare. It is therefore a 
subdivision of the science of Sociology, or the science of social 
relations, which itself is a subdivision of the greater science of 
Anthropology, or the science of man. 

§ 2. It has been objected by some that there can be no such 
thing as a science of man. " Science," they say, " deals only 
with things whose actions and reactions can be foretold, after we 
have mastered the general laws by which they are governed. 
The test of science, as Comte says, is the power of prediction. 
There is a science of Chemistry, because there is a "possibility 
of foretelling what compound will be produced by the union of 
any two elements or known compounds. But man is not 
governed by laws of that sort ; he is a being possessed of affec> 
tions and a will, which often act in the most arbitrary way, — in 
a way that no one can foresee or predict." 

This objection expresses a truth which can never be left out 
of sight. If we ignore it we shall miss the conditions under 
which man's material welfare is to be achieved. Men can never 
be put to a good use of any sort, while they are regarded or 

11 



12 ELEMENTS OF POLITICAL ECONOMY. 

treated as tilings. To do so will be to keep them poor, as well 
as to degrade them morally; for the best work and the wisest 
economy cau be got out of them, only by bringing their free 
will into play in the desirable direction. 

But the possibility of constructing a science of man does not 
rest upon the power to foresee the line of action that each indi- 
vidual man will pursue. Man lives in a world which his will 
did not create, and whose " constitution and course of nature " 
he cannot change. If he act in violation of its laws, he must 
take the penalty. Thus if he indulge in habits that contravene 
the constitution of his moral nature, then moral degradation, 
unhappiness and remorse will be the necessary results. Because 
there is such a moral " constitution and course of nature," 
there is a science of ethics, which enables us to predict, not the 
conduct of each individual man, but the consequences of such 
conduct, whatever it may be. And there exists equally for 
society an economic " constitution and course of nature ;" the 
nation that complies with its laws attains to material well-being 
or wealth, and the nation that disobeys them inflicts poverty 
upon itself as a whole, or upon the mass of its people. To learn 
what those laws are, is the business of the student of social 
science ; to govern a nation according to them is the business 
of the statesman, and is the art of national economy. 

While men are beings possessed of a will, they ordinarily act 
from motives. This is especially true of their conduct in re- 
gard to their material welfare; in this connection the same 
motives act with great uniformity upon almost all men. The 
same wants exist for all ; the same welfare is desired by 
all ; so that in this department of the science of man there 
is so little caprice, that there is nearly as much power to foresee 
and foretell what men will do, as in some of the sciences to fore- 
see the actions of things. Nearly, but not quite so much ; for 
while men are agreed as to the end here, there is room for dif- 
ference of opinion as to the means, and consequently for variety 
of action — for wise and unwise ways of procedure. 

§ 3. What the science of man and of society lacks in certainty, 



SOCIETY A PRIMARY FACT. 13 

as compared with the sciences of nature, it more than makes up in 
the higher interest that it excites. Whatever science deals with 
our own species and its fortunes, comes very close to each one of 
us. Whatever it can tell us of the probable future of our nation, 
or our race, concerns us more than predicted eclipses or cfeemical 
discoveries. The most brilliant chemical or astronomical cer- 
tainty could not move an Englishman so deeply as that bare 
conjecture of Macaulay, that the time may come " when some 
traveller from New Zealand shall take his seat on a broken arch 
of Westminster bridge to sketch the ruins of St. Paul's." The 
other sciences have an independent value ; but they interest us 
most when we see that they have a bearing upon this, when 
they open still larger utilities of nature to human possession, 
and add to the welfare of mankind. We ask the chemist : 
*' Shall the time ever come when we shall no longer be dependent 
upon our coal deposits for light and warmth, but shall be able to 
produce both from the decomposition of water ?" We ask the 
physicist : " Shall we soon be able to use this subtle, omnipresent 
electric force as a motive power ? Shall we ever be able to 
move through the air in manageable balloons, with speed and 
safety ?'^ These are not the greatest problems that science has 
to solve, but they have an interest for us all that more abstract 
questions can never possess. 

§ 4, Our Science considers man as existing in society ; we 
find him, indeed, nowhere else. The old lawyers and political 
philosophers talked of a state of nature, a condition of savage 
isolation, out of which men emerged by the social contract, 
through which society was first constituted. But no one else 
has any news from that country; everywhere men exist in more 
or less perfectly organized society ; — they are born into the 
society of the family without any choice of their own ; and they 
grow up as members of tribes or nations, that grew out of 
families. All their material welfare rests upon this fact, and 
must be considered in connection with it. The cooperation by 
which they emerge from the most utter poverty to wealth, is 
possible only within society and under its protection. Upon 



14 ELEMENTS OF POLITICAL ECONOMY. 

the wise management of its general policy, and the eflSciency 
of its government, the welfare and the security of the indi- 
vidual depend. The natural right to property, by which that 
welfare is perpetuated from day to day, is realized only in 
society. The transmission of the things that contribute to ma- 
terial welfare from one generation to another — of real and per- 
sonal property, of knowledge, skill and methods of industry — 
would be impossible but for the existence of bodies that outlive 
the single life, and aim at their own perpetuation. Vita brevis, 
ars longa, or else each new generation would have to begin at 
the foundation. Hence it is that this science begins with the 
conception of social state ; not with the study of wealth in the 
abstract, nor of the individual man and his desires. 

At the fall of the civilized societies that made up the ancient world, 
the useful arts and sciences would have perished in Western Europe 
with the polities under which they were developed, had not the great 
Benedictine order gathered both into their monasteries. These were 
at once schools of learning and industrial establishments, and the only 
places safe from the barbarous intrusions of half-Christianized bar- 
barians. 

§ 5. Political economy is an art as well as a science. The 
term economy, or house-thrift, does not mean here wise saving, 
any more than it means wise spending. It is borrowed from the 
management of the first and simplest of all human societies, the 
unit out of which all other societies have grown — the family. 
The adjective,poZzYica? prefixed indicates the transfer of the con- 
ception of thrift to the society which exists that justice may be 
done and natural rights be realized, and which for that purpose 
is put in trust with the lives and the material possessions of the 
whole people. 

§ 6. The art of political economy is much older than the 
science. The former came into existence with the first nation, 
the latter began to be studied about the time of the discovery 
of America, and first gained a place as a recognised science a 
century ago. There is nothing unusual in this, for nearly every 
science lags for a time behind its related art. Themistocles knew 
"how to make a small city great" long before Plato and Aristotle 



ART BEFORE SCIENCE. 15 

founded the science of politics. Dyeing, cooking, and a thousand 
other applications of chemistry were in use from the earliest 
historic periods; but the first centennial of Dr. Priestley's dis- 
covery of oxygen, that laid the foundation of that science, has 
been celebrated in our own time. Sometimes the two — the 
science and the art — exist together, with little or no influence 
upon each other, for a long period. Thus there was for centu- 
ries a science of music, taught and studied by men who were 
not practical musicians; while those that were, pursued their art 
without giving the slightest heed to the science. 

All human experience shows that science can be of the 
greatest service to its related art. As chemistry has improved 
and simplified the industrial methods that existed before Priest- 
ley and Lavoisier, so the discovery of the economic laws that 
govern the advance of society in wealth, has greatly changed 
for the better the economic methods of the nations. Some of 
the older empirical rules it has vindicated as right ; others it 
has condemned and set aside as wrong ; it has suggested new 
and extended the applications of others that were old. It runs 
the risk, indeed, of rejecting some methods that were clearly 
right; and it must guard against this, by making the most 
careful and thorough survey of all the facts of the case. 

In the first stages of a science, which we may call the mechan- 
ical, empirical rules predominate among the doctrines ; but 
gradually the simpler and far less numerous scientific ^nwc?}>?es 
that underlie these rules are perceived. When these are once 
grasped, the process of submitting rules to the test of principles 
is an easy and safe one. The science has then passed into its 
dynamical stage. 

The ancients knew no science of political or national economy. 
Commonplace remarks and moralizing reflections on the subject 
are found scattered here and there through their literatures. 
Single facts that could hardly escape their notice, such as the 
advantage of the division of labor, and of the transition from 
barter to the use of money, and the difi"erence between value 
and utility, were remarked upon, especially by iVristotle. In 



16 ELEMENTS OF POLITICAL ECONOMY. 

these hints lay the possible germs of social science, but they 
were not followed up, nor the underlying laws investigated. 

§ 7. The rivalry excited in other parts of Europe, by the 
prosperity of Venice and Genoa, first led men to study the sub- 
ject, and we find it occupying a place in the literatures of Italy 
and Spain, France and England, from the sixteenth century. 
The circumstances of the times gave shape to these studies. 
This was the nationalist period of history. Europe had revolted 
against all the schemes of a universal monarchy ; and independ- 
ent sovereign kingdoms, with national languages and literatures, 
and even churches, divided its area among them. That a thing 
was Spanish or was English, was praise enough in the ears of 
Spaniard or Englishman. How to aggrandize to the utmost their 
own country, at whatever expense to others, was the great 
problem of statesmanship, especially after the religious heats, 
that had divided Europe into two hostile camps, cooled off 
somewhat. And of all means to that end, the possession of an 
abundance of money seemed the best and readiest. After a 
money-famine that had begun with the Christian era, and had 
grown in intensity for fifteen centuries, the discovery of America 
and the East Indies had brought in a vast and sudden supply, 
which had given Spain for a time an undue preponderance in 
European politics, and had everywhere bettered the condition of 
the people. How to acquire it by a foreign trade that would give 
a balance in favor of our own country, — how to keep it here at 
home for general circulation and national uses in case of need, 
was the question. The Mercantile school of writers, as they are 
DOW called, set themselves to find methods. As a rule their 
books were corrective of common errors ; they showed that the 
best way was the indirect way, — to stimulate home industry 
and have plenty of commodities to sell, not to put a premium on 
foreign coins and prohibit the export of gold. Theirs was a 
real science, but in the mechanical stage. 

Among the notable writers of this school are Antonio Serra (1613, a 
Neapolitan) ; Thomas Munn {England's Treasure by Foreign Trade, 1664); 
Andrew Y&TT&nton {Engla7id' 8 Improvement by Land and Sea, 1677-81); 
John Locke {On the Interest and Value of Money, 1691 and 1698); Sir 



THE MERCANTILE SCHOOL. 17 

Win. Petty {Easaya in Political Arithmetic 1691), The systematic writers 
are the Abbe Genovesi {Lezzioni di Coinmercio e di Economieo Civile, 
1765) and Sir James Steuart {Priucijilen of Political Ecortomy, 1767). 
Contemporary oppouents are Sir Josiah Child (Brief Observations con- 
cerning Trade, 1668); le Sieur de Boisguillebert (Factum de France, 
1712, (fee); Marshal Vauban (Projet d'une Dhne Roynle, 1707),* and J. 
F. Melon (Evsai Politique sur le Commerce, 1734.) The opinions of the 
Mercantile school are wretchedly caricatured by many modern writers. 

The new science was as yet a very subordinate branch of the 
larger subject of politics, and political aims predominated in its 
treatment of the subject. As we have seen, the questions that 
it proposed to solve were not of its own suggestion, but were 
propounded by political leaders. It was not yet strong enough 
to take the initiative, or to insist on the benefit of an economic 
policy to the well-being of the people. The final end held in 
view, both in theory and in practice, was the abundant supply 
of money for royal cofi"ers, and the practice was far behind the 
theory. The most absurd financial methods were kept intact 
if they seemed to subserve this end. Monopolies were created 
ad libitmn, and sold to foreigners ] the trade between provinces 
of the same kingdom was burdened with customs-duties, as if 
between separate kingdoms ; the export of grain, as well as of 
gold, was prohibited, that its price might be kept down j the 
industry created and fostered with one hand, was crushed under 
excessive taxation and arbitrary regulations with the other. 
Even the great Colbert, whose policy was the grandest and most 
successful illustration of all of the best and some of the worst 
teachings of the school, died broken-hearted with the ruin of his 
plans through the royal ambition that wasted the nation's 
resources in war, and the royal superstition that was robbing 
France of millions of her best and most industrious citizens. 

§ 8. The second school is that of the EconomUtes or Phi/sio- 
crateSj founded by Quesnay, the physician and "thinker" of 
Louis XV. If the mercantile school unduly subordinated the 
science to the art, the Economistes went to the other extreme 
and made a complete divorce between them. Starting from a 
few simple ideas as the postulates of the science, they built up a 
2 



18 ELEMENTS OF POLITICAL ECONOMY. 

fantastic structure of deductions and theories, that stood in nc 
vital relation to the actual life of society. Their professed aim 
was to attain a natural line of thought, and in that age the 
" natural" was conceived as the antithesis of civilization, as 
then existing. 

In Quesnay's view nature, — by which he meant the productive 
powers of the soil, — is the sole source of a nation^s wealth ; 
agricultural labor is therefore the only productive industry, all 
others being sterile. That this labor produces more than the 
farmer and his household consume, is the origin of all wealth, — 
which is merely the net-product of his tillage. The values 
produced by all other labor are measured by the cost of the raw 
materials and of the workman's food. The web of cotton cloth 
is but so much raw cotton and so much corn turned into another 
form, but retaining the same value. The utility of the new form is 
greater; the amount of wealth the same. From this he inferred 
that national policy should do nothing to develop such sterile 
industries as commerce and manufactures, but merely remove all 
restrictions from agriculture, from the trade in grain, &c. As 
agriculture alone produces wealth, it alone must, in the last 
resort, bear all the national burdens, however these may be im- 
posed. Turgot, his chief disciple, divests the theory of much 
that is fantastic, and in his policy as minister of finance applied 
for the most part merely its just rejection of the system of mo- 
nopolies, close corporations, duties on exports, &c. 

Quesnay's first book {Tableau Eeohomiqne, 1758) was preceded by arti- 
cles (on Fermiera and Grains) in the famous Encyclopedic (1756-7). The 
elder Mirabeau, " the oldest son of the doctrine/' wrote much, of which 
L'Ami des Hoiumea (6 vols., 1755-60) is the best known. His greater son 
furnished the theoretic part of Mauvillon's voluminous statistical work 
on La Monarchic Prusaienne (See §285). Turgot's chief book is Rejlexiona 
8nr la Formation et la Dintribiition dea Richesaea (1766 and 1778). Of the 
many other writers, none add either to the substance or the clearness 
of the doctrine. Dr. Franklin, whose visit to France occurred at a time 
when these opinions were in fashion, became a disciple of Quesnay. 

§ 9. The third or Industrial school of economists was founded 
by Adam Smith, a Scotch professor, and a friend of Quesnay's. 



ADAM smith's*" WEALTH OF NATIONS." 19 

His great work (^An Inquiry into the Nature and Causes of the 
Wealth of Nations, 1776, 1778, 1784 and 1788) occupied him 
for five years. It shows that he was influenced by the Physio- 
crates, yet it is a decided advance upon their teachings. He 
finds the source of wealth in all the three forms of industry, but 
gives the first place in point of productiveness to agriculture, 
the last to foreign commerce ; while he classes as unproductive 
all those forms of human activity that are not directed to the 
production or exchange of commodities. Tracing the natural 
growth of the three great industries, through whose association 
men advance from the poverty of the savage life to material 
welfare, he pronounces against all efforts of the state to direct 
and foster any one of the three, as most likely to turn capital 
out of more into less productive channels. He, like the Econo- 
mistes, would have the State adopt ordinarily a purely passive 
policy as regards the industrial life of the people. By leaving 
every man to do what he will with his own, and to use it in 
whatever way will secure the largest possible returns to himself, 
society will receive the largest possible benefit. In the principle 
of free competition he discerns the tap-root of all national indus- 
trial life and growth ; the enlightened .and active selfishness of 
the individuals who make up society, is the source of general 
well-being. That which is good for the individual, is good for 
society also. If there are inequalities of profits or of wages, 
capital or labor will shift from one channel to another, till 
things find their natural level. 

The chief fault in the book is its failure to fulfil the promise 
of the title. Promising to discuss " the wealth of nations,'' it 
practically ignores their existence, and treats the whole question 
lis if there were no such bodies. Smith writes as if the world were 
all under one government, with no boundary lines to restrain 
the movement of labor and capital, — no inequalities of national 
civilization and industrial status, to affect the competition of 
producer with producer. He ignores, therefore, many of the 
most important elements of the problem that he undertook to 
solve. Sharing in the reaction of the Physiocratists against the 



20 ELEMENTS OF POLITICAL ECONOMY. 

excessively political drift of the Mercantile school, he also goes 
to the other extreme, and gives us, not a science of national or 
political economy, but of cosmopolitical economy, which is not 
adapted to the actual historical state of the world, but only to a 
state of things which has not, nor ever will have, any existence. 

This way of thinking was the popular one at that period ; Eu- 
rope was in a state of reaction against the nationalist drifl of 
the previous centuries, and did not recover from it until the 
French Revolution had carried many very pretty theories to 
their logical consequences, and had shown what they were 
worth. To be " a citizen of the world'' was the ambition of 
educated men, and many of the foremost minds of Europe — 
Lessing and Goethe, for instance — formally repudiated the 
sentiment of patriotism as unworthy of an enlightened civili- 
zation. 

§ 10. In spite of the great nationalist reaction that began 
with Burke and Fichte, the cosmopolitan way of thinking has 
not yet lost its attractions for men. The existence of the cos- 
mopolitical school of economists for nearly a century, and the 
adhesion given to it by a majority of English, and a great num- 
ber of Continental and American writers, are a proof of this. 

In France Jean Baptiste Say reduced the teachings of Smith 
to a more systematic shape, giving them that clearness of expres- 
sion and perfection of form for which French literature is 
famous. In his hands, the cosmopolitanism of the system is 
complete ; his very first title-page dropped the awkward words 
" of nations/' and from this time the abstract conception of 
wealth, its production, distribution and consumption, became 
the themes of what was still called '■^political economy." He 
enlarged the conception of wealth, however, to embrace imma- 
terial as well as material products. Since the passive policy was 
especially assailed as leading to a foreign trade in which the 
balance may be unfavorable, he devoted especial attention to 
the theory of commerce. He was the first to announce that 
commodities are always paid for in commodities, and that there- 
fore to check the amount of imports is to limit in equal measure 



MALTHUS " ON POPULATION." 21 

the power of export. Later writers of the same nation have, 
like Say, generally spent their pains in the elaboration of the 
English theories, without adding much to their substance. Not a 
single recognised doctrine of the cosmopolitical economists can 
be traced to a French author since Say, while the French litera- 
ture, in which those doctrines are defended and enforced, is 
even larger than the English. 

Chevalier, Rossi, Blanqui and Molinari are the chief French repre- 
sentatives of this school. Bastiat belongs to it in his general tendencies, 
but his system is a mixture of its doctrines with those of Carey. 

In England Rev. T. K. Malthus furnished a discussion of the 
other side of the picture — the poverty of nations {Essay on 
Popidation, 1798, 1803, 1807; 1817 and 1826). At a time of 
great political disturbances, when the impoverished classes of 
Europe were calling the governments to account for the bad 
policy or no policy thi^t had led to so much misery, this gentle- 
man, a member of the Conservative party, was led to a study of 
the economic conditions in which that misery originated, that ho 
might close the mouths of agitators by showing that govern- 
ments had nothing to do with it, — that it was the effect of a 
cause beyond the control of the ruling classes. He found that 
cause in the excessive growth of population, which led to the 
pressure of numbers upon subsistence, and could only be per- 
manently controlled by the self-restraint of the lower classes 
themselves. This discovery was a godsend to the cosmopolitical 
school, as it enabled it to tide over a dangerous period of 
popular agitation, when a thousand circumstances seemed to 
conspire to enforce upon economists as well as rulers the lesson 
that governments are put in trust with the national welfare, as 
well as the national honor and safety, and that no mere 
passivity of industrial policy could be a suflBcient discharge of 
the trust. 

In the view of Mr. Malthus, the condition of the mass of 
the people oscillates between ease and misery ; as soon as any 
sudden advance in their welfare takes place, there is a rapid 
increase of numbers through the increase of recklessness as to 



22 ELEMENTS OF POLITICAL ECONOxMY. 

the future, and then years of scarcity follow hard upon the 
years of plenty. It was an easy inference that there is a 
natural rate of wages, a medium between these two oscillations 
above which and below which the rate was unstable and could 
not be permanent. Also that, calling the amount of capital in 
the country that was available for the wages of labor the wage- 
fund, the only way to increase the rate of wages was to increase 
that fund or diminish the number between whom it was to be 
divided. 

Somewhat later, David Ricardo carried the investigation of 
the subject a step farther, desiring to show the first cause of 
the inequality of condition that distinguishes different classes of 
society. Looking through Whig spectacles, as Malthus had 
looked through Tory ones, he found that inequality to result not 
from the operation of a natural and unavoidable cause, but from 
the effects of an artificial monopoly, the te«ure of land. The few 
who have been lucky enough to possess themselves of the best 
soils at the first settlement of a country, form a privileged class 
that can live in idleness upon the labor of others, through exact- 
ing payment for the use of the natural powers of those soils. 
This theory — though so different in its motive — was accepted by 
the school as supplementary to that of Malthus. Both — as they" 
came to be taught — had the merit of showing how the apparent 
anomalies of society grew out of circumstances either natural 
or generally accepted as natural; in the last analysis the 
principle of competition was shown to be the tap-root of in- 
dustrial phenomena in both cases ; both vindicated the passive 
policy as the only wise one, and argued all national interference 
to be a fighting against invincible facts. 

Mr. Ricardo (following Say and Torrens) also elaborated the 
theory of international exchanges, in connection with the notion 
that money is a purely passive instrument of exchanges, changing 
its purchasing power according to the amount of it that a 
country possesses. From this it was an easy inference that a drain 
of money from a country would either have no effect, or would 
correct itself by so increasing the purchasing power of money ic 



RICARDO AND HIS CRITICS. 23 

comparison with commodities, as to make the country a bad 
place to sell in, but a good place to buy in. 

With him the constructive period of the English school ends, 
and, after a time in which the writers are chiefly commentators 
on the traditional body of doctrines, a critical period begins. 

Ricardo's theory of rent has a great many aspects, according to the side 
from which it is studied. Did he, like the earliest writers who followed his 
lead, accept the landlord's monopoly as natural and Inevitable, or look 
upon it as a mischief that society would be well rid of? His dry method 
of discussion makes it hard to say. Later writers draw from the theory 
the inference that landed property, as dififering from all other property 
in that its utility is not the product of labor, is especially subject to 
national control. This is probably more in accord with Ricardo's own 
motive, as may be inferred from his hostility to the legislation by which 
the landowner was secured against foreign competition in the grain 
market. His Principles of Political Economy and Taxation (1817) is the 
last piece of positive work of the school, — the crowning of the edifice. 
McCulloch, James Mill, Chalmers, De Quincey, and many others are his 
commentators ; the later writers, from Senior to Thornton, his critics. 

§ 11. About the year 1833 English thinking, and its ex- 
pression English literature, took a new departure, becoming less 
dry and mechanical, more fresh, vigorous and genial. Economic 
literature shared in the impulse. N. W. Senior led off (1835) 
with a vigorous criticism of both Malthus and Ricardo. He 
especially emphasized the fact that as political economy con- 
sidered wealth in the abstract, and excluded all political con- 
siderations, it had no right to intrude into the political sphere 
with its conclusions, and insist on statesmen acting in accordance 
with them. At the utmost, they could be but one of many 
considerations that should influence them. The divorce of the 
science from the art in the English school — a divorce like that 
which once existed between the science and the art of music — 
was thus candidly confessed. But this nice distinction, as is 
commonly the case, was not kept in view by most writers or by 
the statesmen who took lessons from them. 

Thomas Tooke (^History of Prices^ 6 vols., 1838-58) gave a 
refutation of the theory that money plays a mere passive part 
in industry, prices rising in proportion to its increase, aild falling 



24 ELEMENTS OF POLITICAL ECONOMY. 

ia proportion to its decrease. He thus indirectly brought into 
question the theory that an unfavorable balance of trade can be 
of no injury to the nation. 

W. T. Thornton showed that the theory of a natural and ne- 
cessary rate of wages was not borne out by the facts, — that there 
is no uniformity but rather the most arbitrary difference in their 
rate, — that capital can unnaturally depress it below what is right 
and natural when the workmen stand alone, — and that work- 
men in combination can raise and have raised it. Consequently 
the theory of a wage-fund, changing in amount with the growth 
of capital, and divided pro rata among the workmen of a coun- 
try, is a fiction. He especially exhibited the disastrous effects 
of English theories upon English agriculture, in separating 
the mass of the people from the soil and breaking up the small 
farms to make large ones. 

Herbert Spencer (partly anticipated by N. W. Senior and 
Poulett Scrope, and followed by W. R. Grreg) refuted the Mal- 
thusian theory by the evidence of facts. He showed that there 
has been a pressure of population on subsistence in the earliest 
stages of society and those only, and that with every advance in 
numbers and the closeness of association, the pressure naturally 
diminishes. 

German and English students of the history of land tenure 
(i. e. Von Maurer, Nasse, Maine and Laveleye) showed that 
Ricardo's theory of the origin and nature of rent was not sustained 
by history. In the earliest times contracts for land were un- 
known, and all payments were determined by custom, not by 
competition. They showed that the transition from customary 
status to free contract is the great industrial drift of progressive 
society ; but that the transition is by no means perfect, and that 
the assumption that it is, whether as made by jurists or by 
economists, has been a fertile source of wrong to the poorer 
classes of society. 

John Stuart Mill, besides emphasizing Senior's separation of 
the science from the art, called in question the whole system 
of the distribution of the products of labor and capital, as an 



THE CRITICAL STAGE. — CAIRNES. — AMERICANS. 25 

« 
artificial and perhaps dispensable one. Accepting the theories 

of Malthus and Ricardo, and seeing no augurj of a better future 

for the working classes from the present workings of the wages 

system, he declared it doomed, unless it proved capable of better 

things, to pass away. In this he partly followed those socialists, 

who demand a reconstruction of society and the extension of the 

sphere of government so as to embrace the direction of industry. 

More moderate men, equally convinced of the fiiilure of the sys- 
tem of competition, contract and wages under the existing con- 
ditions, hope for a change through the voluntary association of 
masses of the people, so that they may become their own em- 
ployers and their own providers. 

All these writers have departed from the spirit and the 
method, as well as the teachings, of the recognised masters of 
the school. They have reached the conclusions embodied in 
these criticisms by an inductive study of the actual facts of 
industrial life, instead of coming at them by a series of deductive 
inferences from premises assumed at the outset. Prof. J. E. 
Cairnes undertakes to vindicate both the method and the con- 
clusions (with some unavoidable modifications and extensions) 
of the older authorities, and to refute the unhappy concessions 
of these later writers. 

§ 12. In America the cosmopolitical school has had many adhe- 
rents, who have written largely in defence of its doctrines, but 
none of them are of any importance in a scientific point of view. 
They have rendered less service, even, than its adherents in 
France, for while they have added nothing to the substance of* 
the teaching, they have, at the least, not surpassed their English 
masters in vigor of presentation and artistic form. 

Deserving of mention are Condy Raguet, Prof. Thomas Cooper of 
South Carolina, W. B. Lawrence, Dr. Wayland, the poet Bryant, Prof. A. 
Walker, Prof. A. L. Perry, and David A. "Wells. 

§ 13. Within the present generation there has arisen in Europe 
and America a school whose controlling motive seems to be a re- 
action against the excesses of the English or cosmopolitical school. 
They are called sometimes the school of the Kathedersocialkten, 



26 ELEMENTS OF POLITICAL ECONOMY. 

and sometimes the Historical School. To this last title they have 
no proper right, as, while they reproduce in their hooks a great 
number of historical facts, they do not start from the consider- 
ation of national life, which is the unit of history. They are 
cosmopolitan, like the economists they criticise, and, in the ab- 
sence of any stable principle of economic science, they often 
carry their destructive criticisms of the older doctrines to an 
unwarrantable length, assigning to law, custom, and individual 
idiosyncrasy a reach of influence which leaves no room for any 
genuine economic science. Yet this new school has been of great 
service in its criticisms of the unscientific methods of the older 
economists, and in disputing their claims to have placed their 
teachings upon a truly scientific footing. It has helped to recall 
men from the world of theories to that of reality. 

The best known representatives of this school are Prof. Roscher in 
Germany, Prof. Laveleye in Belgium, Profs. Cliffe Leslie and Ingram 
in the United Kingdom, and Profs. F. A. Walker, Dunbar, and Bolles 
in the United States. It has representatives among the economists of 
every European country. 

§ 14. The nationalist school of economists may be traced to 
later writers and statesmen of America and Germany. Yet we 
might even claim Adam Smith himself as its founder, for in his 
happy inconsistencies he gives his sanction to nearly all its prin- 
ciples. A still earlier writer, the great Bishop Berkeley of Cloyne 
(in his Querist, 1735 and 1752), gives suggestions of a line of na- 
tional policy, and of the economic reasons for it, that give him, 
a clearer as well as a prior claim to the honor. The form of 
his work, a series of nearly 600 leading questions, has caused 
it to be neglected ; but many of the bishop's notions, especially 
as to the nature and functions of money, are ahead of current 
ideas in our age as well as his own. The wretched condition of 
his native Ireland, its lack of money and of manufactures, 
furnished the motive to these investigations, while his travels on 
the Continent and his knowledge of England furnished him with 
materials for comparison. 

Passing by statesmen and state-papers (though Alexander 



FICHTE. — COLERIDGE. 27 

Hamilton and his famous TreMsuri/ Report of 1791 deserve 
mention), we find an early literary champion of the Nationalist 
school in the great philosopher Fichte. His book (Z>er geschlos- 
sene Ifandelssfaat, 1801), however, is not in strictness an 
economic treatise, but as its title page tells us, an appendix to 
his treatise on jurisprudence, and a specimen of a larger treatise 
on politics. He finds the wealth of the nation in the equilibrium 
of the three great industries, and regards it as the function of 
the government to produce and perpetuate it by sufl&cient legis- 
lation. Regarding the interchange of national productions, 
save of those that cannot be produced in all latitudes, as a rem- 
nant of the barbarism and free trade that reigned in Europe 
before the existing nations had taken shape, he would at once 
put a stop to it by substituting paper money, current only within 
national bounds, for the gold and silver that pass current between 
the nations. As to cosmopolitanism and the possibility of a 
world-state, it will be time enough to talk of that, when we have 
really become nations and peoples. In striving to be everything 
and at home everywhere, we become nothing and are at home 
nowhere. 

Other German philosophers, — Franz Baader (as early as 1790), J. J. 
Wagner, K. C. F. Krause, K. A. Eschenmayer ; — political writers, — Adam 
MUUer, Robert von Mohl ; — and economists, — C. A. Struensee, C. F. Ne- 
benius, F. B. G. Herrmann, J. G. BUsch, — with many others, opposed 
the passivity theory in their writings. 

Samuel Taylor Coleridge, the illustrious English poet, critic 
and philosopher (in his La^ sermon on the existing Distresses 
and Discontents^ 1817), without entering into details or proposing 
any definite economic remedies, deplored the over-balance of 
the trade spirit in English politics — theoretical and practical ; 
and declared his belief that that spirit is '' capable of being at 
once counteracted and enlightened by the spirit of the state, to 
the advantage of both." He called in question the maxims re- 
ceived as fundamental by the school, seeing " in them much 
that needs winnowing. Thus instead of the position that all 
things find, it would be less equivocal and far more descriptive 
of the fact, to say that things are always finding, their level ; 



28 ELEMENTS OF POLITICAL ECONOMY. 

which might be taken as the paraphrase or ironical definition of 
a storm. But persons are not things — but man does not find his 
level.'' Quite in his spirit, his chief disciple F. D. Maurice 
speaks (National Education, 1839) of " the mass of doctrinea 
going under that name" of political economy, " ^art of them state- 
ments of undoubted facts; part of them useful or curious ob- 
servations about facts; part of them more or less successful 
attempts to eliminate laws from facts ; part of them crude and 
heartless apophthegms of morality. " 

§ 15. It was the sufferings inflicted on Germany by persist- 
ence in the policy of passivity after the peace of 1815, that 
led to a general study of the question, and in Frederick List 
the German people found one who could state and explain their 
needs as a nation, and defend a more national policy on scientific 
grounds. After a course of successful agitation, that laid the 
foundation of the Zollverein, he came to the United States in 
1825, leaving all his books behind him, to study the laws of 
social growth in the practical examples ofi"ered by the new world. 
As the country was then making rapid advances in wealth, under 
the protection of a nationalist policy, he had a large field for 
study, and repaid what he learnt with his Outlines of American 
Political Economy (1827), a brief pamphlet that contains the 
germ of his larger work. The National System of Political 
Economy, (Das Nationale System der politischen (Economies 
1841 J English transl. 1856), which he prepared after his final 
return to Germany in 1832. The title well describes the book, 
and List's line of thought. In his view nations are industrial 
as well as political wholes, characterized by an internal equality 
of industrial capacity, and destined to advance in wealth and 
prosperity, when they remove all obstacles to the mutual inter- 
change of services between their own people. If all nations 
stood on the same ground of equality in numbers, capital and 
industrial development, no such obstacle would be presented by 
the freest trade with all other nations ; but in the actual his- 
torical state, a few possess in their enormous wealth both the 
power and the will to bring the rest into a state of industrial subor- 



LIST AND CAREY. 29 

dination by the tyrannous power of capital. If, therefore, a 
poorer nation wishes to have free trade at home, she cannot 
remain passive as to the direction of the national industry. 

§ 16. Of native American writers, a very considerable number 
defended the nationalist theory of economy, from the beginning 
of our union into one people, and some even earlier. Of these 
Alexander Hamilton, Tench Coxe, Matthew Carey and Charles 
J. Ingersoll deserve mention. But their aim was not to furnish 
a scientific basis for a national economy, but rather to urge a cer- 
tain economic policy from reasons of direct and evident utility. 

The former work was accomplished by Mr. Henry C. Carey, 
in whose writings, as we believe, the science of national economy 
passes out of the mechanical into the dynamical stage, i. e. be- 
comes a true science. Instead of giving us a mass of empirical 
rules and maxims such as we find in the writings of the mercan- 
tile school, — or a mass of fine-spun speculations that stand in no 
vital relation to the practice and life of nations, as is done by the 
school of the Economistes, and (in a less degree) by that of 
Adam Smith, — he presents a body of economic teaching, that 
rests on a few great and simple principles or conceptions, drawn 
by actual observation from life itself, yet nowhere incapable of 
direct application to any practical question. These principles 
are the laws that govern the constitution and course of nature 
in things economical. They are at once the laws of human 
nature, and of that external nature, in harmony with which 
man was created. 

Their discovery involves a searching criticism of the very pre- 
mises of the so-called Industrial School, and of those conclusions 
that fairly earned the name of " the dismal science." For it 
shows that these natural laws are laws of progress towards wealth 
and the equality of wealth. Where they are allowed to act freely 
and fully, men rise from proverty, isolation and lawlessness, to 
wealth, association and national order. The history of human 
economy is the story of man's transition from the savage's sub- 
jection to nature, to the citizen's mastery of her forces ; and 
with every advance the greater advantage is reaped by the most 



30 ELEMENTS OF POLITICAL ECONOMY. 

numerous class, that is, the poorest. It thus " vindicates the 
ways of God to men," and vindicates also the existing frame- 
work of our civilization against the destructive criticisms of 
socialists and communists. 

And wherever the wretchedness of the savage perpetuates 
itself or reappears within the sphere of civilization, there is to be 
seen, not the effects of natural law, but of its violation. There 
some class — at home or abroad, — through some vicious legisla- 
tion or defect of legislation, has interfered for selfish ends to 
hinder the natural progress toward wealth, equality and the 
harmony of interests in the national equilibrium of industries. 
To remove such obstacles is the sole function of the state, as 
regards the active direction of industry. 

Of Mr. Carey's books the chief are Essay on the Rate of Wages (1835) ; 
The Past, the Present, and the Future (1848) ; The Harmony of Interest* 
(1851); The Slave Trade, Domestic and Foreign (1853); Principles of 
Social Science (3 vols. 1858); and The Unity of Law (1872). Of these 
and others of his woi-ks, translations of one or more have appeared in 
eight of the principal languages of Europe. 

Other members of this school : in America, the late Stephen Colwell 
{The WayH and Means of Payment, 1859), the late Hon. Horace Greeley 
[Easnys designed to elucidate the Science [Art?] of Political Economy, 
1870) ; Hon. E. Peshine Smith [Principles of Political Economy, 1853 and 
1872); and Dr. William Elder {Questions of the Day, Economical and 
Social, 1870). In France, M. Fontenay, Benjamin Rampal and A. Clapier 
{Del'Ecole Anglaise et de V Ecole Americaine en Economic Politique', 1871). 
Fred. Bastiat borrowed some of Mr. Carey's ideas {Harmonies Economiquesy 
1850 and 1851) to fight the socialists, and made a curious mixture of 
these with those of the cosmopolitical school. In Italy the statesman 
and economist Ferrara gives his adherence to Mr. Carey's first princi- 
ples, and censures Bastiat for his half discipleship. He has translated 
the Princijjlei into Italian. In Germany Dr. DUhring of the University 
of Berlin [Carey's Umw'dlzung der Volksioirihschtiftslehrc uud Social- 
wissenschnft, 1865 ; Capital nnd Arheit, neue Antworten avf alte Fragen, 
1865 ; Die Verkleinerer Carey's, und die Krisis der Nationalokonomie, 
1867; Kritische Geachichte der Nationalokonomie und Socialismus, 1871; 
Cursus der National- und Socialokonomie, 1873); and Schultze-Delitzsch, 
the great antagonist of socialism, and promoter of co-operation {Capitel 
zu einem Deutschen Arbeiter-Katechiamus, 1863; Die Ahschaffung det 
geschdftlichen Risico durch Herrn Lassalle; einneuea Kapitel znm Deutschen 
Arheiter-Katcchismus, 1866 ; besides many smaller works. French trans* 



THE CONTRAST OF THE SCHOOLS. 31 

lation of these two by Rampal, 1873.) In England, Judge Bylei 
(Sophisms of Free Trade, 1st edition 1849; 9th edition 1870; American 
edition 1872.) 

§ 17. The differences that exist between the two schools is 
not merely in regard to the details ; it is a difference about 
foundations and ^rst principles. Neither can concede to the 
teaching of the other the name and rank of a science, without 
giving up its own claim to that name and rank. 

The difference is one of method also. The English school 
adopt the deductive method of the mathematical sciences, and 
reason down from assumed first principles to the specific facts. 
They claim that the necessary data for this are already at hand, 
in the known characteristics and tendencies of human nature, 
the avarice and the desire of progress, which control and direct 
the economic conduct of great masses of men. They leave all 
other elements out of account as inconstant, while they regard 
these as constant. Theirs is therefore " a science based upon 
assumptions" (^Saturday Revieio) ; it " necessarily reasons 
from assumptions, and not from facts " (J. S. Mill). 

The American and German school apply the inductive method 
of observation and generalization, which has produced such bril- 
liant results in the natural sciences. They begin with a wide 
study of the actual working of economical forces, and endeavor 
to reason upward from the mass of complicated facts to the 
general laws that underlie and govern all. They begin by 
recognising the existence of an actual constitution and course of 
nature, instead of seeking to devise an artificial one on assumed 
principles. 

These differences will be exemplified in the following chapters. 



CHAPTER SECOND. 
The Development of Society. — The Nation. 

§ 18. " Man is a political animal," Aristotle tells us. His 
nature has not attained its perfection until he is associated with 
his fellows in an organized body politic. Whatever may be the 
historical occasion of the origin of the state, this fact of man's 
nature is the suflScient cause. 

The first type of society is the family. This, like the state, 
is a natural form. It is a relationship not constituted by a 
reflective act of its constituent parts. No man has a choice 
as to whether he will or will not be born into a family, though 
he may by his own act cease to belong to it. Like the state, 
the family has a moral personality and a distinct life. It is a 
whole which contains more than is contained in the parts as 
Buch; that is, it is an organism, not an accretion. 

§ 19. The family expanded into the tinhe. Related or neigh- 
boring families held or drawn together by natural affection or 
neighborly good feeling, or a sense of the need of union for the 
common defence, but chiefly by the political needs and instincts 
of their nature, formed an organic whole. By the legal fiction 
of adoption, all were regarded as members of one family and 
children of the common patriarch, living or dead. The rever- 
ence for the common father whose name they bore became a 
hero-worship, and bound them together by religious ties. Their 
living head or chief was regarded as inspired with judgment 
to pronounce upon disputed cases, which gradually gave rise to 
a body of judicial rules or laws revered as of divine authority 

§ 20. The tribe became — though not always — a city. A 

hill-fort thrown up for defence against some sudden attack 

became the rallying-point and then the residence of its people. 

The conquest or adoption of other tribes added to their numbers 

and strength, and their home was enclosed b}"" a wall capable of 

defence. The tribal gods of the first citizens obtained general 
32 



THE CITY AND THE NATION. 33 

recognition as the defenders of the city, but those of the new- 
comers were still worshipped by the clans. The first and the 
adopted tribes took the place of power, claiming to be " the 
people," and forming an aristocracy who possessed exclusive 
knowledge of the laws and religion of the city. Only after pro- 
longed struggle were these published in a code, and places of 
responsibility opened to the new citizens or plehs. 

§ 21. By the conquest of other cities, the city in some cases 
attained ao imperial raok. In other cases a number of cities 
freely united in a league of offence and defence, and ceded their 
power to make war to a central congress, and established a 
common treasury. Both movements are in the direction of the 
nation, the complete form of the state, as the tribe and the city 
are incomplete forms. The nation is scarcely found in ancient 
history, save perhaps among the Jews and the Egyptians, and 
even among them the tribal divisions perpetuated themselves 
within the national unity. 

§ 22. The nation in its true form first appears in the king- 
doms founded in Western Europe by the Teutonic tribes, after 
the destruction of the Roman Empire. The Teuton hated 
cities and loved the open country. When he spared a city he 
generally left it to its old occupants and made them his tributa- 
ries. He divided the open country into marks or communes, 
whose occupants were actually or by adoption members of one 
family-clan and bore the same name. Several of these were 
gathered by force of the political instinct into " hundreds," 
hundreds into " shires." and shires into kins-doms. Over each 
of these subdivisions an elder, alderman or chief presided. In 
this way the race passed from the tribal to the national consti- 
tution, without developing the vigorous municipal life that had 
previously thwarted all attempts at establishing any larger body 
politic than the city, except a military, imperial despotism. 

Within the Teutonic mark towns grew up by the same pro- 
cess as in the ancient world, and the antipathy of the race to 
the town life wore oflf. But before these new municipalities 
were powerful enough to hinder the national growth, the nation 
3 



34 ELEMENTS OF POLITICAL ECONOMY. 

had become an established fact. A second enemy of the 
national 'inity was the feudal system, which conferred large 
powers upon the local barons, in countries that had been con- 
quered rather than occupied. Everywhere save in Germany 
itself the joint eflforts of the king and the people overthrew this 
local power, and made the central government supreme. Thus 
the national consciousness superseded all other political attach- 
ments. 

§ 23. The nation is the normal type of the modern state, as 
the city was that of ancient society, and the tribe that of the 
prehistoric times. Besides many inaccurate definitions of its 
nature, several that deserve our notice have been given from 
different stand-points. 

(1) Geographically the nation is a people speaking one lan- 
guage, living under one government, and occupying a continuous 
area. This area is a district whose natural boundaries designate 
it as intended for the site of an independent people. 

No one point of this definition is essential, save the second. 

(2) Politically the nation is an organization of the whole 
people for the purposes of mutual defence from outside inter- 
ference and of doing justice among themselves. It is a people 
who ''will to be one" in a body politic, for the purpose of re- 
alizing and making positive those natural rights which inhere in 
man's nature. 

(3) Ethically the nation is a moral personality vested with 
responsibility and authority, and endowed with a life peculiar to 
itself, i. e., not possessed by the parts as individuals. 

§ 24. All these notions, and others besides, are elements of 
the historical conception of the nation. The historical nation is 
an organism, a political body animated by a life of its own. It 
embraces not one generation but many, the dead and the unborn 
as well as the living. It contemplates its own perpetuity, making 
self-preservation the first law, and being incapable of providing 
for its own death or dissolution. There is in its own nature no 
reason why it should ever cease to exist, and the analogies often 
drawn from the life and death of the individual man are falla- 
Qious. The end of the nation is its own perfection ; towards 



THE DIVINE ORIGIN OF THE STATE. 35 

that it tends by a continual progress to a larger and freer life. 
Thus. in its laws it continually aims to make political rights 
more and more the realization of natural right. In its gradual 
or sudden modifications of the form of government, it tends to 
make it more and more the exponent of the wants and the 
powers of the governed. Industrially it continually aims to 
develop the resources of its soil and the activities of its people, 
until they become in all necessary things independent and self- 
sufficient. 

§ 25. The nation as a moral persr/nality must have had the same 
ultimate origin as other moral personalities, whether we conceive 
of it as the direct creation of God or as the work of His crea- 
tures. The traditions of all ancient cities with which we are 
acquainted, point to the first of these alternatives, that is, to a 
divine origin of their unity and their laws; and no one who be- 
lieves in the continual government of the world by the Divine 
Will can doubt that nations exist in consequence of that will. 
*' He setteth the solitary in families. . . . He fixeth the bounds 
of the nations." Then national laws are authoritative because 
they set forth that Will, though its agency be concealed by reason 
of its working through and by the will of man. Hence the 
right of the nation over the lives and persons, as well as the pos- 
sessions, of its members. It has a delegated authority from the 
Giver of life. 

§ 26. The state is either the creature of God, with authority 
limited because delegated, or is an uncreated entity with au- 
thority unlimited because original. In the latter case it can 
confess none of its acts to be wrongful, since it owns no law or 
morality above or beyond its own will. It must punish all appeals 
to " the higher law " as treasonable. The atheistic theory of the 
state thus necessarily leads to the despot's construction of its 
powers. Those who hold it have generally been in modern times, 
by a happy inconsistency, on the liberal side in politics, but 
when they attain to power, the logic of their position must lead 
them on to despotic measures. The only lasting and inviolable 
guarantee of personal freedom is in the doctrine of the state's 
divine origin and authority, though even this doctrine may be 



36 ELEMENTS OF POLITICAL ECONOMY. 

abused to serve the purpose of 3espots, when the state is con- 
ceived as constructed ah extra by the imposition of a govern- 
ment by a divine authority from without. But the doctrine 
of the Old Testament is that the state is constituted through 
the people themselves being drawn into national unity, and that 
the government is the result and exponent of this fact. The 
governor, as the word originally signified, is the steersman of 
the vessel, giving direction to its course. But it is not his 
function to furnish the moving force of the ship of state. That 
is furnished by the vital force of the whole body politic. 

§ 27. As God made the state, he had a purpose in making 
it, a purpose which includes some elements common to all states 
and others that are peculiar to the particular state. Each state, 
like each man, has a calling, a vocation. Every nation is an 
elect or chosen people. It has a peculiar part to play in the 
moral order of the world. When it recognises this purpose, it 
is, in Hebrew phrase, a people in covenant with God. The 
leading purpose of the Old Testament is to set forth the manner 
of such a national life, and the moral laws that govern it. It 
gives the essential features of such a life, in connection with 
some that are peculiar to the Jewish nation. 

§ 28. The universal element in the vocation of a state is ex- 
pressed in the statement that it is the institution of rights. 
This differentiates it from the family, which is the institution of 
the affections; also from mankind at large, as rights are realized 
and made positive through the existence of the state. Justice 
or Righteousness, Plato discovered, is of the essence of the 
Btate. It can therefore attain to the purpose of its vocation 
only by complying with the ideal of justice as apprehended by 
the national conscience, — an ideal ever advancing in clearness 
and completeness as the nation tries to realize it. At the first 
this ideal requires only the righteous treatment of its own 
citizens as alone invested with the rights it recognises. After- 
wards men are brought by analogy to feel that as the state 
judges between man and man, God is judging between nation 
and nation. Hence originates a body of law between the nations. 



THE END AND THE PROGRESS OF THE STATE. 37 

If justice be of the essence of the state, any wilful and con- 
scious violation of it, i. e., any national unrighteousness that 
does not spring from and find its palliation in a low ideal of 
righteousness, must be a blow at the national life and existence. 
It must weaken the bonds which bind men to one another. 
Hence to plead the necessity of the national life as the excuse 
for such acts, is to plead that the state can only be saved by 
being destroyed. A state that has ceased to aim at righteous- 
ness has given up its raison d'etre^ and is a practical contra- 
diction. It has ceased to be a body politic, and has become a 
band of pirates. 

§ 29. Justice has two aspects. (1) It is the state's function 
to do justice upon evil-doers within (and sometimes without) its 
own boundaries, by punishing them for past and deterring 
them from future invasions of the rights of others. (2) It is 
also called upon to do itself justice ; that is, to secure the 
fullest and freest development of the national life in all worthy 
directions. As self-preservation is its first duty, there is in- 
volved in that duty this obligation — to progress in national life. 
'* The end of the state is not only to live, but to live nobly." 

§ 30. In the order of nature, progress is attained through 
the differentiation of the parts of a living organism from each 
other and from the whole. " The higher a living being stands 
in the order of nature, the greater the difference between its 
parts, an^ between each part and the whole organism. The 
lower the organism, the less the difference between the parts, 
and between each part and the whole" (Goethe). 

"The investigations of Wolff, Goethe, aud^Von Baer, have 
established the truth that the series of changes gone through 
during the development of a seed into a tree, or an ovum into 
an animal, constitute an advance from homogeneity of structure 
to heterogeneity of structure. . . . The first step is the ap- 
pearance of a difference between two parts of its substance. . . . 
This law of organic progress is the law of all progress. 
Whether it be in the development of the earth, in the develop- 
ment of life upon its surface, in the development of Society, of 



38 ELEMENTS OF POLITICAL ECONOMY. 

Government, of Manufactures, of Commerce, of Language, 
Literature, Science, Art — this same evolution of the single into 
the complex, through successive differentiations, holds through- 
out. From the earliest traceable cosmical changes down to the 
latest results of civilization [it] is that in which progress 
essentially consists. . . . As we see in existing barbarous tribes, 
society in its first and lowest forms is a homogeneous aggrega- 
tion of individuals having like powers and like functions, the 
only marked difference of functions being that which ac- 
companies difference of sex. Every man is warrior, hunter, 
fisherman, tool-maker, builder ; every woman performs the same 
drudgeries ; every family is self-sufficing, and, save for purposes 
of aggression and defence, might as well live apart from the 
rest" (Herbert Spencer). 

See also Coleridge's Idea of Life. (Works, Vol. I., esp. p. 388.) 

This is true less of the spiritual than of the material side of 
the national life. It applies especially to those relations to 
nature, which are the theme of social science in the sense that 
we take it, — relations which come very directly under the action 
and control of natural laws (See § 2), As regards the higher 
or spiritual side of that life, each member of the perfect state is 
in some sense a reproduction of the whole body politic, — like it 
a free moral personality. 

Yet the Apostle Paul applies this analogy of difference and interde- 
pendence to the most purely spiritual form of society. " Th#body is not 
one member but many, and all members have not the same oflBce. . . . 
The eye cannot say to the hand, I have no need of thee." 

§ 31. Every fully developed state is a complex form of life, 
whose elements may be distingmshed as three. There is the 
industrial state, the jural state, and the culture-state. The 
second embraces the state's political life, the people's advance in 
freedom and social morality, and its development in legislation ; 
the third is the sphere of intellectual movement, progress in the 
fine arts, in literature and the sciences. The first is the sphere 
of the material well-being of the people. The full development 



THE RIGHT AND THE LIMITS OF PATRIOTISM. 39 

of each of the three is essential to the highest well-being of the 
whole body politic. 

§ 32. In seeking the full and free development of the national 
life on all its sides as its chief end, the state cannot be charged 
with selfishness. The affections and the attachmeiits of finite 
beings are of necessity circumscribed, that they may be intense, 
vigorous and healthy. In the family life we should count the 
man immoral who loved other men's wives as he loved his own; 
unnatural if he had no more affection for his own children than 
for those of other men. To " provide for his own, especially 
for them that are of his own house," is one of the first duties 
of the head or the member of a nation as well as of a house- 
hold. 

While acting first of all for the interest of his own nation, he 
is not bound to seek to injure or cramp the natural develop- 
ment of other nations. He can quite consistently cherish the 
warmest desires for the welfare of every other national house- 
hold, aud scrupulously avoid any act that would interfere 
with it. The more strong and hearty and pure the attachment 
he feels towards his own nation, the more likely he is to sympa- 
thize with the patriotic citizens of other nations. The late F. D. 
Maurice well says : " If I being an Englishman desire to be 
thoroughly an Englishman, I must respect every Frenchman 
who desires to be thoroughly a Frenchman, every German who 
strives to be thoroughly a German. I must learn more of the 
grandeur and worth of his position, the more I estimate the 
worth and grandeur of my own. . . Parting with our dis- 
tinctive characteristics, we become useless to each other, — we 
run in each other's way; neither brings in his quota to the 
common treasure of humanity." 

Those who cherish the enthusiasm that men feel for their own nation, 
as ethically right, do not necessarily repudiate " the enthusiasm of 
humanity." They may very well recognise its value and dignity, while 
feeling that it belongs to another sphere than either the jural or indus- 
trial state. There is another kingdom, "not of this world" or order, in 
which " there is neither Jew nor Greek," founded by him who awakened 
the sense of human brotherhood in the hearts of men. 



40 ELEMENTS OF POLITICAL ECONOMY. 

§ 33. The industrial state contains three great fundamental 
classes, — the agricultural, the commercial and the manufactur- 
ing. A nation takes high rank industrially in proportion as 
all the three are fully developed and exist in equilibrium. If 
any one of the three is depressed or hindered in its develop- 
ment, the whole body politic suffers accordingly. The others 
may seem to prosper at its expense, but because the state is a 
living organism and not a dead aggregate of individuals, one 
member cannot suffer, but all the members must suffer with it. 

§ 34. The individuality of the parts of an organism has its 
end in their interdependence and mutual helpfulness. A flock 
of animals, though " a collection of individuals,'' is not a whole 
made up of differentiated parts. It is only " a numerical ex- 
tension of a single specimen." A mob of men is equally 
deficient in true organic unity. It is united only by the exist- 
ence of the same overmastering rage or lawlessness in each 
single individual, as animates the entire mob. A state is a body 
in which men have different functions as well as different per- 
sonalities ; in which each has his place of service to the whole 
body. The greater and more marked the variety of the parts, 
the more closely the whole body is bound in an effective unity. 
The nation takes a low rank industrially whose members are not 
employed chiefly in serving one another, but in serving the 
members of other nationalities. 

§ 35. All history illustrates the principle that the chief 
growth of the state is from within. Nations have often imparted 
to each other wholesome and stimulating impulses, but beyond 
a certain limit foreign influence has always been a hindrance, 
and has been jealously resented by the wise instincts of the peo- 
ple. We see this in the history of art, literature, language, law 
and political institutions, and every other side of the national life. 

Any plan of human life, any project for human improvement, 
which, either in the interest of imperial ambition or of cosmo- 
politan philanthropy, ignores the existence of the nations as parts 
of the world's providential order, can work only mischief and 
confusion. 



CHAPTER THIRD. 
Wealth and Nature. 

§ 36. We are engaged in "an inquiry into the nature and 
causes of the wealth of nations." The word wealth is used in 
two senses ; as meaning either the aggregate of possessions that 
minister to man's necessities and tastes, or the possession of an 
abundance of such objects. In the former or popular sense 
wealth is the measure of man's power over nature ; in the latter 
or scientific sense it is the power itself developed to more than 
the average degree. 

Closely connected with the term wealtli is the term value. 
The one is the antithesis of the other. If wealth is the mea- 
sure of man's power over nature, value is the measure of 
nature's power over man, — of the resistance tliat she oflPers to 
his efforts to master her. Some of the natural substances are to 
be had everywhere, always and in the form needed for man's 
consumption. These have no value, though the very highest 
utility. Others, such as the water for the supply of a great 
city, need to be changed in place, and have a value proportional 
to the cost of their transfer. Others need to be changed in form 
by manufacture as well as changed in place before their use, and 
have a still higher value. In other instances the resistance 
takes the form of scarcity, and is therefore in some degree in- 
superable, and the degree of the value is still higher. 

§ 37. Man stands in close relation to nature, as the possessor 
of a body which forms part of the physical world. He there- 
fore needs the services of nature continually. His body is un- 
dergoing incessant decays and renewals. Motion, respiration, 
sensation, digestion, circulation of the blood, even thought itself 
wear away its tissues, and unless this waste be replaced the man 
must die literally of exhaustion. 

Furthermore, these vital processes can be carried on only in 

the presence of a certain amount of animal heat, which must be 

41 



42 ELEMENTS OF POLITICAL ECONOMY. 

supplied from within, and (in most climates) shielded from 
without to prevent its excessive radiation. 

The chemical substances that form the bodily frame are chiefly Oxygen, 
Hydrogen, Carbon and Nitrogen. The two first in the form of water 
make 75 per cent, of the whole body, and 83 per cent, of the most com- 
mon foods. Berzelius says that the living organism is to be regarded as 
a mass diffused in water, and another chemist has humorously defined man 
as fifty pounds of nitrogen and carbon suspended in six buckets-full of 
water. 

The starch which forms so large an element in the ordinary foods 
enters into the composition of none of the tissues. It is consumed in the 
lungs to furnish the vital heat, and breathed oflf as carbonic acid. 

§ 38. Hence man's two great material necessities are food 
and clothing. The desires for these furnish the motive to the 
vastest activities of the race. As his brain expands, indeed, 
and as society develops, other desires grow into life and become 
motives to action; but these two are universal. Others are 
voluntary ; these are enforced by the sensations of hunger ind 
cold. Others are directed to comforts or luxuries; these to 
things necessary and indispensable. 

The productions of the three kingdoms of nature do not 
equally satisfy these desires. Though there are apparent ex- 
ceptions, it may be laid down as a rule that he obtains food and 
clothing from the animal and vegetable kingdoms only. The 
animal kingdom as a whole is supported by the vegetable, which 
in its turn depends upon the abundance and fitness of the great 
mixtures of vegetable and mineral substances which we call 
soil. Only the lowest type of vegetation can support its life 
upon mineral food alone. 

§ 39. We can trace the story of the earth's development back 
to a period when vegetation, and therefore soil, did not yet exist 
upon its surface. Some of the natural agents already at work 
were indeed preparing for the formation of soil. Glacial corro- 
sion and other violent forms of action were grinding masses of 
rock into fine sand, and the frosts were chipping away the edges 
and faces of the rocks by sudden expansion of the water that 
they had absorbed. 

Vegetation began with the lichens and the mosses, which 



THE HISTORY OF THE SOIL. 43 

secured a foothold on the surface of the rocks, and slowly crum- 
bled down a few grains of sand from the hard mass (by the 
action of the oxalic acid which they secrete), and dying, mingled 
therewith the ashes of their o'wn decay. This furnished the 
first soil for the next hig;hest order of vegetable life, and thus 
through successive orders of vegetable life the soil was deepened 
and enriched. 

As illustrating Goethe's law of progress by differentiation of the parts 
from the whole and from each other (see § 30), it is worth while to notice 
the stages of this development as given in the great classification of 
Oken. First come the acofyledons (lichens, mosses, Ac), which have 
neither root nor stem, neither bark nor wood, neither leaves nor seeds. 
Then the itionocotyledona (grasses, lilies and palms), which have no 
branches nor true leaves, but may have either woody stems, or venous 
liber, or bark — never the three united. The third are the dicotyledons 
(fruit and forest trees, <tc.), which unite all these parts in one organism. 

This process of the formation of soil on a rocky surface by 
successive vegetable growths, still takes place with some modifi- 
cations in the coral islands of the Pacific. When the coral 
polyp has raised its rocky fortress above the sea level, the 
surface is soon strewed with fragments that the waves break off 
and grind into sand, which is mixed with the remains of the 
coral polyp. A cocoanut carried safely in its rough husk on a 
long voyage is washed ashore and takes root. The decay of its 
leaves forms a new soil, and the birds that rest on its branches 
bring the seeds of other vegetation in their crops, so that a 
multifarious growth rapidly covers the barren rock. 

§ 40. The sustenance which the growing plant derives from 
the mineral kingdom is not taken solely nor even mainly from 
the soil through its roots, but from the air through its leaves. 
Were it otherwise, the growth of the soil must stop as soon as its 
depth became as great as that to which the plants thrust down 
their roots. But six feet of soil is not uncommonly found on the 
prairies of the West, and even that depth still increasing. The 
chief food of plants is carbonic acid, one of the elements of the 
air, which in the early geological ages was so abundant that only 
vegetable life could have existed on the earth's surface. The 



44 ELEMENTS OF POLITICAL ECONOMY. 

first luxuriant vegetable growths, the mosses and the ferns 
absorbed it in vast quantities, growing with marvellous rapidity, 
and forming the deposits of decayed vegetation, now known to 
us as coal, after having been 'subjected to vast pressure for 
unnumbered ages. By burning this as fuel we give back to the 
atmosphere a small part of the carbonic acid that once saturated 
it, and thus furnish food for new vegetation from the substance 
of those which flourished ages ago. Nothing that is consumed 
or that decays upon the earth's surface is wasted ; — nothing is 
wasted but what goes into the sea. " Atmospheric air is the 
grand receptacle from which all things spring and to which they 
will return. It is the cradle of vegetable and the coflBn of 
animal life" (Dr. Jno. W. Draper). 

Carbonic acid forms but a thousandth part of the chemical mixture 
that we call air., 

§ 41. The foliage of the plant is a vegetable substitute for 
mouth and lungs. It presents a vast absorptive surface to the 
air throu2;h which it drinks in carbonic acid and transmutes it 
into woody fibre. To pluck all the leaves of a tree in the early 
summer would be to kill it by suffocation and starvation. From 
the vast storehouse of the air the plant draws its food, and the 
atmospheric supply is kept up by the decay of other plants, by 
the rcwspiration of animals, and by the consumption of wood and 
coal as fuel. When the plant dies, a small percentage escapes 
back to the air again, but the great mass is added to the wealth 
of the soil, from which so little was taken. 

The proportion of sustenance that a plant takes from the air 
has been ascertained by experiment to be about nine parts in 
ten. In one case a willow tree weighing five pounds was planted 
in a box, in two hundred pounds of soil that had been carefully 
dried and weighed. To prevent the settlement of dust in any 
appreciable quantity, the soil was covered with a metal plate 
pierced with very fine holes to allow the free passage of the air; 
and it was moistened with rain-water only. After a few years 
the tree was removed, and the soil was carefully collected and 



FERTILITY A PROCESS. — THE SOIL A MIXTURE. 45 

dried. On weighing them it was found that the tree had 

gained sixty-seven pounds and the soil had lost eight ounces. 

The late Prof. J. F. Frazer told me that while engaged in the geological 
survey of Pennsylvania he found af willow tree growing in the cleft of a 
rock where there was absolutely no soil whatever, but a continual ooze 
of water was keeping the cleft moist. 

§ 42. The fertility of the earth is therefore not an accom- 
plished fact, but a vast process that is still going on. Nature is 
preparing for the time when man will make still larger demands 
upon her resources than at present. Even when the fertility 
of a piece of ground has been exhausted by continual abuse, 
she brings her restorative energies into play. Thus the aban- 
doned tobacco plantations of Eastern Virginia have been covered 
by a growth of pines, whose long taproots reach down below 
the exhausted surface, and bring up mineral substances, which 
after the fall of the leaves and the decay of the stems enrich 
the soil. A similar instrument of recuperation nature furnishes 
to the farmer in the clover plant, whose peculiarity it is to thrust 
down its roots to the mineral subsoil and feed only upon that. 

§ 43. The soil, it has been already said, is a mixture of 
mineral and vegetable matter. The former, even when less in 
amount, is by no means inferior in importance. It predominates 
in the subsoil, and in the best soils appears mainly as silicious 
sand and clay. The first use of the former is to keep the soil porous 
and make it ready to receive, — of the latter to keep it compact 
and able to retain. An excess of either substance imparts to 
the soil a corresponding defect. 

In the plant the silex or flint of the sand reappears as the 
skeleton. The slight and fragile stalks of our grains and grasses 
are kept upright under their load of seed by a thin coating or 
varnish of silica. Every acre of wheat requires from 93 to 150 
pounds. This mineral element is but slightly present in the 
fruits and seeds which man carries from the soil ; somewhat 
more largely in the stems and trunks of trees, but most of all 
in the leaves which return to the soil at once, or after having 
served as food for cattle. The leaves of trees contain fifteen 
times as much as the trunks. 



46 ELEMENTS OF POLITICAL ECONOMY. 

§ 44. Persistent human stupidity can bring to nought the 
most beneficent arrangements of nature. The fertility of the 
soil may be destroyed in spite of tendencies to perpetuate and 
extend itself, and that in more ways than one. 

(1) By the absence of any system of rotation of crops. Year 
after year men will take the same elements from the soil by 
growing the same crop upon it, wheat or tobacco, or some other. 
There is land around Albany where forty-five bushels to the acre 
was once no excessive yield in wheat, but where at present not 
more than fifteen can be grown. Much of the country in which 
the last battles of the late civil war were fought is made up of 
exhausted tobacco plantations. The whole system of Southern 
agriculture under the slaveholding regime tended to the same 
result. 

§ 45. (2) By continually taking away from the soil and never 
making any return. The absence of a single element that enters 
into the composition of a plant will as much prevent its growth 
as would the absence of all. " For every fourteen tons of 
fodder carried off from the soil there are carried away two casks 
of potash, two of lime, one of soda, a carboy of vitriol, a large 
demijohn of phosphoric acid, and other essential ingredients " 
(Prof. Johnston). 

Substances that have served as food for birds and animals are 
wprth most to keep up the fertility of the soil. In passing 
through the digestive organs they are reduced in size to their 
finest particles, and enriched with organic elements, which the 
animal derives from the atmosphere. They, are especially much 
richer in nitrogen than the food itself. In some districts of 
England cattle are stall-fed with oil-cake and other expensive 
foods, simply for the sake of the manure, and by this system on( 
district of moorland in Lancashire has been reclaimed anc 
brought up to a high degree of fertility. 

Whenever, therefore, the products of the soil are consumed 
in the vicinity of the farm, the farmer will have at hand th( 
means of making such a return to the soil as will keep up anc 
even increase its fertility. But whenever they are transported 



RETURN TO THE SOIL. — DENUDATION OF TREES. 47 

to a considerable distance for consumption the power to make an 
adequate return to the soil is seriously diminished, if not abso- 
lutely destroyed. The richest soil cannot long sustain such a 
process of exhaustion, if its proprietors are engaged in sending 
its natural wealth over land and sea to a distant market. 

§ 46. The existence of the means and the power to make 
adequate returns to the soil is no guarantee that these will be 
fully employed. Through the sewers of our great cities, and 
the rivers into which they empty, immense quantities of fertili- 
zing matter are poured into the sea, and are thus utterly lost. 
The soil around the city of Chicago, for instarvce, is naturally 
sterile ; in the refuse of her slaughtering-houses the city has 
the means of raising it to a very high degree of fertility. At a 
great expense provision has been made to carry off the whole 
mass and pour it through the Illinois and the Mississippi rivers 
into the Gulf of Mexico ; on all hands the measure is applauded 
as a bold and wise piece of engineering. Belgium is the only 
civilized nation that is fully awake to the importance of this 
subject, but England bids fair to emulate her. 

§ 47. (3) The fertility of a country may be destroyed by 
stripping it of its trees, which seem to affect very greatly the 
amount of rain that falls on its surface. In some parts of 
upper India the trees have been cut away, the wells have sunk, 
the rain-fall has ceased, and the country threatens to become a 
wilderness. The Punjaub seemed likely to meet the same fate ; 
when the British conquered it not a single tree was observed in 
its vast area, and the country was rapidly becoming a desert, 
when its plantation was begun and the waste was arrested. 
Numidia, the Plain of Babylon, and Judea are instances of 
countries once proverbially fertile, and now barren (it is 
believed) through denudation. When Europeans occupied 
the Cape Yerde and Canary Islands, and St. Helena, they 
found them well wooded and fertile. As the trees have been 
recklessly cut down, droughts have become common, and the 
capacity of the islands to support a large population has disap- 
peared. The increasing sterility of parts of France, of Lorn- 



48 ELEMENTS OF POLITICAL ECONOMY. 

bardy, and of large districts of Spain, is ascribed to tbe same 
cause. In Lombardy it has been found that the denudation of 
the country contributes to the rapidity and the volume in which 
its light and friable soil is washed into the Adriatic by the Po 
and its tributaries. Great injury has thus been done to the 
agricultural capacity of the country, and still greater is feared. 
And as a rule, the absence of trees seems to lead to the concen- 
tration of the rain-fall in great storms, and the disappearance of 
better distributed and more moderate showers. The streams 
alternate between the destructive violen-ce of torrents and the 
desolation of dr5ught. The tribes of Arabia perceived the con- 
nection between drought and the absence of trees ; the oldest 
law recognised as binding on the whole peninsula is one for 
their protection, and it was repeated in the injunctions given 
by the Prophet and the Caliphs to the captains whom they sent 
forth to subdae the world. 

§ 48. All these ruinous results are matters for control and 
correction by the action of the state. Individual selfishness is 
always shortsighted; the nation as the supreme owner of the 
national domain has the fullest right to guard against its reckless 
exhaustion. The state is owner of the national domain in a 
sense that is not true of individual proprietors. Much or all 
of it that is incapable of individual appropriation, is national 
property, — such as rivers and other inland waters, harbors and 
fisheries. 

Especially is it a question of national policy, because insoluble 
to individual effort, to bring the farmer and artisan into neigh- 
borhood, and secure the consumption of the crops within rea- 
sonable distance of the farm. 



CHAPTER FOURTH. 
The Science and Economy of Populationt. 

§ 49. The evolution^ of life upon our planet, after passing 
through the vegetable and the merely animal stages, was crowned 
in the advent of man, the especial theme of social science. All 
the great processes of nature's development that preceded his 
coming, were but preparations to fit the earth to be his home, 
and to gratify the capacities and bring into action the powers 
with which he was endowed. The earth was given into his 
hands, and he was commanded to "multiply and replenish the 
earth and subdue it." 

§ 50. To " subdue the earth," to become master over nature, 
is, as we have seen, only another way of stating the transition 
from poverty to wealth. And, as the command implies, that 
transition has gone hand in hand with the increase of numbers. 
In the earlier stages of society man lives in comparative isola- 
tion from his fellows, weak in the presence of nature's vast 
powers and therefore poor in the command of her resources 
The scattered families, the isolated tribes, are unequal to helpful 
cooperation ; for the most part they are confined to the use of 
such of nature's provisions as are easily accessible to their inef- 
fectual and wasteful labor. First the wild beasts and birds and 
fruits of the forest are brought into usej then the peaceful 
flocks whose skins furnish ready-woven clothing, and whose 
milk and flesh supply food. The wealth of the mine, of the 
grain-field, of the cotton plantation, are utterly beyond their 
reach. 

§ 51. But with the growth of numbers too great to be fed by 
the mere pasturage of the land, comes the transition to agricul- 
tural industry. New powers of nature, forces that lay unused 
BO long as the scantiness of men forbade efficient cooperation for 
their mastery, are made to serve man ; cattle that ran wild and 
I were slain for food, are tamed to the labors of plough and cart; 
4 49 



60 ELEMENTS OF POLITICAL ECONOMY. 

plants that grew wild on the hillside are brought under culture, 
and by improvement and the selection of seed, produce an ever- 
increasing quantity of food and clothing. The waterfall that 
fell idly over the rocks, or the wind that blew unburdened as it 
listed, turns the mill ; the peat and coal that lay neglected are 
made into fuel. A division of labor separates the functions of 
the human members of society, and each species of work is 
done more effectively and productively for employing the whole 
time and attention of the men employed in it. Better tools and 
implements are invented; and last of all, machinery, and the 
giant forces that actuate it, come into play in man's service, 
taking the place of muscular strength, and at every advance 
lowering the value of articles of utility, and making them 
obtainable in larger quantities and by a larger number of 
persons. 

§ 52. At every step in this great past of man's industrial 
development, the growth of numbers and of wealth has gone on 
with equal strides. In the earlier stages the pressure of popu- 
lation upon the means of subsistence is marked and painful; 
yet beneficent, as thrusting men into closer and more helpful 
association, and forcing them to adopt wiser and better methods. 
But every advance has been richly rewarded, for with each 
acceleration in the rapidity of social movement, the resistance to 
be overcome has diminished. Each generation has worked not 
for itself only, but for all that were to come ; and the result of 
all wisely directed work has been to make easier and more 
effective the task of those who came later. " Other men 
labored ; ye have entered into their labors." 

§ 53. It is, therefore, apart from all merely ethical considera- 
tions, a wise economic policy for a nation to guard the lives and 
the health of its people, and to remove all artificial obstructions 
to the natural growth of population. It is indeed the duty cor- 
relative to its right to command their lives and persons in its 
own defence ; but it is also the best policy, in view of both the 
military strength and the industrial welfare and contentment of 
its people. For the more people there are productively employed 



THE STATE THE STEWARD OF LIFE AND HEALTH. 51 

in any well-managed country, the greater the share of food and 
clothing, of necessaries and comforts, that will fall to each one 
of them. Whatever tends to diminish their numbers, — or, what 
comes to much the same thing, to lower their bodily health and 
strength — has also the tendency to impoverish them by diminish- 
ing their power of cooperation and association. Every retro- 
gression to the sparse numbers of earlier times, is also a retro- 
gression to their poverty. 

§ 54. " But," it will be said, " what need is there of state 
interference in the matter ? In every man's breast is implanted 
the instinct of self-preservation, to lead him to take care of him- 
self Surely we can leave this matter to individual action, and 
to the voluntary cooperation of individuals." The instinct in 
question is exceedingly effective as a motive in the presence of 
visible and well-understood danger. But where the peril is 
more recondite, though not less real, the instinct is good for 
nothing. Only reflection and forethought, accompanied with a 
large and exact knowledge of the scientific conditions of life and 
health, and a readiness, by no means universal, to act upon 
these, is sufficient in this case. The state can command the 
services and opinions of the best judges ; it can carry out whole- 
sale measures, and override the mulish opposition of wrong- 
headed people, in cases where only general action is of any avail. 
In so doing, it is not overriding '* the judgments of individuals 
respecting their own interests, but giving eflfect to that judgment; 
they being unable to give effect to it except by concert, which 
concert again cannot be effectual unless it receives validity and 
sanction from the law" (J. S. Mill). Thus in England the law 
recently passed to limit the hours of work in mills and factories 
for married women, received the support of nearly all that class 
of mill-hands. They were free to make such private contract 
with the mill-owner as they pleased, but in fact their freedom 
amounted to nothing whatever until the law required them to 
refuse excessive work. 

In other cases the right of state interference rests on the same 
ground as the laws that forbid and furnish attempts at self- 



52 ELEMENTS OF POLITICAL ECONOMY. 

murder. The man who persists in maintaining a dunghill or a 
cesspool under his windows, or in living in a house sordid with 
filth or imperfectly ventilated, may have the excuse of igno- 
rance, but society has not. The officers of the state have as 
much right to force him to reform these things, as they would 
have to dash a dose of poison out of his hand. In some cases 
there is not even this excuse. Certain trades, such as cutlery- 
grinding in Sheffield, are paid at a high rate because they prove 
fatal in ten or fifteen years to those who engage in them ; but 
the workmen have been known to resist stoutly any provision 
that was meant to diminish the risk (or rather to postpone the 
certainty) of death, as tending to lower wages. "A short life 
and a merry one !" is the reckless saying with which such 
people take their lives in their hands. 

§ 55. The state, then, is the steward of the life and the health 
of its individual members. There are many measures by which 
it naturally and fitly discharges this trust; such as (1) requir- 
ing local governments and municipalities to enforce public clean- 
liness and to provide thorough drainage, and good roads for safe 
travel ; (2) by quarantining vessels and persons who come from 
places where infectious diseases are raging ; (3) by enjoining the 
adoption of preventive measures (disinfectants, vaccination, 
&c.), in times of epidemics; (4) by chartering and endowing 
colleges competent to give medical instruction and to grant 
medical degrees, and by requiring that a doctor so qualified 
shall sign a certificate of death and of its cause, before legal in- 
terment shall take place ; (5) by forbidding the sale of unripe, 
overripe, diseased or adulterated articles of food ; (6) by forbid- 
ding women and minors from engaging in excessive work or in 
night-work in factories; (7) by requiring that dangerous employ- 
ments shall only be carried on, and explosive machines used, 
with all possible precautions for the safety of the workmen and 
the public, and by enforcing this by general state inspection. 

Besides these negative checks on the waste of human life and 
health, there are many positive measures that contribute to the 
game end. Such are the public instruction of the young in the 



MALTHUS'S "LAW OF POPULATION." 53 

first principles of practical hygiene; the establishment of public 
baths, parks and gymnasia; the requiring of cities to furnish 
an abundance of pure water, and to see that it is introduced into 
every house. 

It is questionable whether the sale of what are Called patent medicines 
should be allowed by the state. Most of these substances, I believe, are 
compounds that would be useful in some cases of disease, but are exceed- 
ingly dangerous when used indiscriminatingly, as they must be in the 
absence of competent advice. Others are simply fraudulent, and con- 
tain nothing that could have any effect, either good or bad. 

§ 56. But all this is open to a general objection, that has 
occupied a very large space in the discussion of this subject. 
It will be said that measures to hinder the action of those 
destructive agencies, and more especially such as tend to promote 
and foster the increase of a nation's population, will do a very 
great deal of mischief instead of good. For unless something 
check it, the number of people in a country will double every 
twenty-five years, and go on increasing in a geometrical ratio, 
while subsistence increases only by an arithmetical increment. 
Thus in two centuries, " taking the whole earth and supposing 
the present population equal to a thousand millions, the human 
species would," if the growth were thus unchecked, '^ increase 
as the numbers 1, 2, 4, 8, 16, 32, 64, 128, 256.; and subsist- 
ence as 1, 2, 3, 4, 5, 6, 7, 8. In two centuries the population 
would be to the means of subsistence as 256 is to 9 ; in three 
centuries as 4096 is to 13; and in two thousand years the dif- 
ference would be incalculable" (Rev. T, R. Malthus). 

Mr. Malthus's Essay on Population appeared in 1798. Its main posi- 
tion was anticipated by Herrenschwand {Diacoura fondamental snr la 
Population, 1786), but the theory obtained its wide currency through the 
English writer. It was eloquently opposed by Godwin, the author of 
Political Justice ; then in detail by Sadler, Allison, Doubleday, N. W. 
Senior and Quetelet, Its latest English opponents are Herbert Spencer 
and W. R. Greg. The latter says : " The doctrine has been accepted by 
every writer of repute on economical subjects. . . None of the many 
authors who have questioned or assailed it, . . . have been able to shake 
in any degree its hold upon the public mind. . . It has remained 
the fixed, axiomatic belief of the educated world." {The Enigmas of Life.) 



54 ELEMENTS OF POLITICAL ECONOMY. 

§ 57. If this view be correct, it is not the growth of popula- 
tion, but the eflSciency of the "checks" upon it, that best con- 
tributes to the well-being of the nation. These checks are of 
two kinds: (1) positive, such as war, famine, pestilence, &c. ; 
(2) preventive, such as sexual immorality and voluntary celi- 
bacy. The practicalinferences drawn by Mr. Malthus and his 
school from this theory were that wherever the state can dis- 
courage the increase of the population without interfering with 
personal liberty, it should do so. Regarding pauperism as the 
result of over-population, they were in general opposed to any 
provision for the poor, either public or private ; regarding that 
as a premium upon recklessness and self-indulgence, and as a 
useless interference between the violators of a divine law and 
their divinely-appointed punishment. Or if provision must be 
made for the poor, they would have it managed in such a way 
as to discourage and prevent " the propagation of a race of 
paupers.*' They especially labored to create a strong public 
opinion on the subject, and to diffuse this through all classes. 
J. S. Mill would have 'Hhe producing large families" " regarded 
with the same feeling as drunkenness or any other physical 
excess." 

One inference drawn from the theory was that a high rate of 
wages is exceedingly undesirable. For when working people 
are paid abundantly they naturally become reckless as regards 
the future ; the rate of increase is accelerated, the labor-market 
overstocked, and the workmen must suffer a fall of wages to or 
even below "the natural rate" again. Any high rate must 
therefore be merely temporary, and add to the misery and dis- 
content of the working classes, by accustoming them to enjoy- 
ments, which they afterwards lose the power to command. 

§ 58. The theory obtained general currency in England and 
some other countries as an easy and not unsatisfactory explana- 
tion of the misery that existed in the closely settled countries 
of Europe. It was an explanation that involved no censure of 
the leaders in social policy, and that gave full sanction to their 
disposition to give themselves as little trouble as need be about 



VARIOUS INTERPRETATIONS OF MALTHUS. 55 

the suffering classes. But it had such a plausibility in it, that 
men of quite another stamp adopted it heartily, — men like 
Chalmers and the younger Mill, who really longed and labored 
for the social elevation and welfare of their countrymen. 

§ 59. The earlier disciples of Malthus, and their master, 
treated this alleged tendency of population to outrun subsistence 
as an insurmountable obstacle to the permanent welfare of the 
mass of mankind. In the several editions of the Essay on 
Population^ his statements of this opinion are somewhat toned 
down in concession to hostile criticism j but even the last re- 
mains open to the same interpretation. Or if he has any hope, 
it is from the progress of society in education and knowledge, 
until all men shall be able to "read, mark, learn and inwardly 
digest" his pleas for voluntary restraint in this matter. (He 
himself had only eleven children, as M. de Sismondi tells us.) 
Mr. McCulloch also lays it down as a " principle that the power 
of increase in the human species must always, in the long run, 
prove an overmatch for the increase of the means of subsist- 
ence.'' James Mill says ; " The general misery of mankind is 
a fact which can be accounted for upon one only of two posi- 
tions, either that there is a tendency in population to increase 
faster than capital, or that capital has by some means been pre- 
vented from increasing so fast as it has a tendency to increase." 
Rejecting the latter of the two suppositions, he accepts the 
former as the fact. And he declares that " however slow the in- 
crease of population, provided that of capital is still slower, 
wages will be reduced so low that a portion of the population 
will regularly die of want." 

§ 60. The later writers of this school seem inclined to lay 
more stress upon the counteracting forces, viz. : the growth of 
subsistence and the checks to population. Archbishop Whately 
even assigns to these the rank of a counter-tendency, comparing 
the two to the centrifugal and the centripetal forces that keep 
the earth for ever moving in the same orbit, and emphasizing 
the fact that " much as our population has increased within the 
last five centuries, it yet bears a far less ratio to subsistence than 



56 ISLEMENTS OF POLITICAL ECONOMY. 

it did five hundred years ago." N. W. Senior offering a mass 
of evidence to the same purpose, says : '* I believe in the actual 
power of population to increase so as to press upon the means of 
subsistence. I deny the habitual tendency. I believe the 
tendency to be just tho reverse." Yet he also says that '^ there 
are few portions of Europe the inhabitants of which would not 
be richer if their numbers were fewer, and would not be richer 
hereafter if they were now to retard the rate at which their 
population is increasing.*' 

§ 61. Mr. John Stuart Mill better represents the great mass 
of English writers on this topic. He holds that the tendency 
pointed out by Malthus is the constant element in the problem, 
and all others are inconstant and variable. Not that there is 
any need to despair in view of this fact. If the uiass of society 
were really and generally enlightened, the preventive cheek of 
abstinence would be quite sufficient to overmaster this unhappy 
and dangerous tendency. All the progress of human civiliza- 
tion has been through the growing ascendancy of man's higher 
over his lower nature. The race of men have their future in 
their own hands in this matter, and as they awake to the realiza- 
tion of the fact, they will govern themselves more wisely. The 
social moralist might fairly object here that this constant victory 
of the higher nature of man has been won through men enter- 
ing into those relationships from which Mr. Mill would have 
them abstain, and from their being drawn out of their sordidness 
and selfishness thereby. Some of the social regulations and in- 
stitutions on the Continent, which Mr. Mill unhappily chose for 
eulogy, show us by their effects that whatever discipline the 
self-contained philosopher may find in this solitary life, it is to 
the mass of men the road to degradation and debasement. 

But we need not go out of the strictly economic sphere, nor 
even outside of Mr. Mill's concessions, to find arguments. Since 
the law was enunciated, whatever its acceptance by the intellectual 
classes, the mass of men have neither believed nor acted on it. 
Yet, as Mr. Mill admits, the actual state of society, as compared 
with what it was, does not bear out the theory. " This does not 



MISERY EXCEPTIONAL. — ITS DECREASE. 57 

prove that the law does not exist, but only that some antagonistic 
principle is at work which is capable for a time of making head- 
way against the law.'' This exceptional and antagonistical 
principle he finds in the progress of material civilization ; that 
is, in the growth of man's power over nature and her utilities. 
He specifies the improvements in agriculture and in machinery, 
better roads and means of communication, and the spread of 
education. Very right, save in regarding civilization and its 
progress as exceptional, whereas it is the law ; and in accepting 
misery as the law, whereas it is the needless exception. In this 
point lies the deepest ground of distinction between the English 
view of the subject and that here advocated. The latter looks 
to the future hopefully, tracing there with prophetic foresight 
all the great ascending lines of human progress as carried for- 
ward without stop or limit. The other regards that future with 
despondency, or at least a gloomy uncertainty, being most im- 
pressed with the existence of forces and tendencies that have 
wrought misery and promise ruin. 

§ 62. The theory is discredited by the experience of the past 
in this matter. The pressure of population upon subsistence is 
characteristic of the periods and the places where population is 
most sparse, — not of those where it is densest. " Let any one," 
says Mr. McCulloch, whom we quoted above, " compare the 
state of this or of any 'other European country five hundred or a 
thousand years ago, and he will be satisfied that prodigious 
advances have been made, that the means of subsistence has in- 
creased much more rapidly than population, and that the labor- 
ing classes are now generally in possession of conveniences and 
luxuries that once were not enjoyed by the richest lord." 

Take the extreme case of Belgium, whose Flemish provinces, 
though naturally poor in soil, are the most densely peopled 
district in the world. In spite of the absence of large manu- 
factures and a too general dependence on agriculture, the stand- 
ard of comfort is high, and continues to rise. Switzerland rivals 
these provinces in density of population and in the general difi'u- 
sion of comfort among her people. Were the population of 



58 ELEMENTS OF POLITICAL ECONOMY. 

Europe to be doubled, there is no reason to suppose the soil 
would furnish them insufficient support. Deducting one-third 
of her soil as not arable, and assigning two acres per head to her 
possible population, she would easily support 800 millions, or 
three times her present population. Yet Zurich has one person 
to every one and a quarter acres. 

Belgium has 440 people to the square mile ; one of her Flemish pre 
vinces has 1800. Four cantons of Switzerland approach her average; 
Basle 420 J Argovie 398; Thurgovie 368; Zurich 365. Lombardy has 
370; England and Wales 360; Holland 300; Italy 225; France, Ger- 
many and Ireland 180; Austria 164; Switzerland 157; Spain 90; Turkey 
in Europe 76; Russia 30 ; Sweden 22. 

Asia is generally regarded as the cradle of the human race. 
Here then we must fiad — if anywhere — the sad effects of a 
prolonged multiplication of the race. Yet Asia is only one-third 
as densely peopled as Europe, and the part of Asia in which 
population is densest, Hindoostan, is capable of supporting a 
much greater number. 

The stories told of the density of the population in China, like many 
other details about that empire that have come down from last century, 
are apocryphal. China, according to the census of 1864, has about 260 
to the square mile; but Chinese statistics are not very trustworthy. The 
census of 1812 put the density at 283 to the square mile. 

America, Africa and Australasia are but very thinly settled, 
and it is hardly possible to estimate the greatness of the popula- 
tion which they are capable of supporting. 

§ 63. Of the soil actually under cultivation, not more than a 
very small part is cultivated as it might be, even in the existing 
stage of agricultural science. The average yield of wheat in 
England, for instance, is 26 bushels to the acre. But the fact that 
57 and even 60 bushels have been grown is enough to show that 
England is under no necessity to import one-fourth of her bread- 
stuffs. Only a very small part of her soil is farmed scientific- 
ally, and official returns made in 1873 show that she has seven 
and a half million acres, more than half of them in the most 
fertile part of the island, not under cultivation. In the opinion 
of N. W. Senior the yield of food would be quadrupled during 



BETTER FARMING NEEDED. — EARLY FAMINES. 59 

the century then beginning (1835), and might possibly be multi- 
plied tenfold. Even soil that is held too poor to repay cultiva- 
tion, may be made fertile by the skill of the agricultural 
chemist. Thus Mr. Huxtable on an acre of chalk down — gene- 
rally given up to the sheep — raised twenty-five tons of turnips, 
two years running, at a less expense than is usually required for 
a scantier crop on good soil. 

But these better methods are the product of an age when 
population is dense, cooperation easy, and the human mind is in 
high activity. ^ 

Great Britain contains 56,815,353 acres, of which only 31,102,600 acres 
are cultivated, and 2,187,078 acres are returned as woods and plantations 
for the growth of timber or the protection of game ; leaving 23,525,675 
acres in a state of nature. Of this Wales has nearly 2,000,000; England 
about 7,500,000, and the rest is in Scotland. Most of this is in the moun- 
tainous counties, northern and south-western ; but over 18 per cent, of the 
most fertile parts of the kingdom are still uncultivated. Outside of the 
Scandinavian kingdoms, which may be compared to Scotland, no Euro- 
pean country of which we have trustworthy statistics, allows so much of 
its domain to lie idle. Austria proper has eight per cent, uncultivated; 
Bavaria less than six and a half; Wurtemburg not five. 

§ 64. The earlier records of all civilized countries, and the 
existing state of savage nations, disclose to us habitual poverty, 
frequent famines and consequent pestilences. In the JSaxon 
Chronicle and the earlier mediaeval historians, there is a sad and 
monotonous record of famines, year after year; and England is 
no exception among European nations. Since the populations 
have trebled and quadrupled, they are rarely heard of, save in 
thinly-settled countries like Sweden and Persia. If they occur 
elsewhere, they are owing to drought or some other unforeseen 
calamity, and owe much of their desolating force to the bad 
economic management that has kept the whole people to a single 
occupation, or made them dependent upon a single crop; for a 
failure or a series of failures of that crop must produce dreadful 
misery. But that is the condition of an undeveloped and im- 
perfect society, not of one whose industrial growth has been 
allowed to keep pace with its growth of numbers. " But even 
Ireland, poor and populous as she is, suffers less from want with 



60 ELEMENTS OF POLITICAL ECONOMY. 

her eight millions of people [1829] than when her onlj^ inhabit- 
ants were a few septs of hunters and fishers." So again in our 
own country, a large proportion of the early colonists from 
Europe died of hunger and privation, and colonies were broken 
up, because their lack of numbers and of the power of mutual 
help made them unable to cope with the resistances of nature. 
Their successors struggled long with the hardships of their life. 
As numbers grew, famines disappeared; a century ago two or 
three millions were abundantly fed on the soil that had hardly 
supported forty thousand Indians before the coming of the white 
man. A much vaster number is now still more abundantly pro- 
vided for, from the food grown in the same area. 

" Whatever tends to develop the natural resources of a 
country, to call forth a spirit of enterprise among its inhabitants, 
to render each part less dependent upon itself, and to bind up 
the commonwealth by the ties of mutual assistance and common 
interest, tends to mitigate the actual pressure of a famine. The 
whole list may be expressed in four words — enlightened govern- 
ment and modern civilization. These are the specifics for famine. 
Where they exist, scarcity will never result in depopulation. 
Where they do not, the utmost endeavors of government may 
mitigate, but they cannot avert." — Hunter's Annals of Rural 
Bengal, p. 55. 

§ 65. History shows us also that a vast decrease in the popu- 
lation of a country, through the sweeping operation of Mr. 
Malthus's positive and preventive checks, is a dangerous possi- 
bility. The investigations of Dureau de la Malle and Zumpt 
have established the fact — now accepted by scholars generally — 
that the vast decline in its population was a chief cause, if not 
the cause, of the overthrow of the Roman Empire by the bar- 
barians. Greece declined steadily, in this respect, from the 
time of the Persian wars ; Italy from that of the struggle with 
Carthage. The free population of Italy — not including Cis- 
alpine Gaul — at that period was about three millions ; the de- 
crease was so marked and rapid that thejTws trium liberoTum wab 
created to make marriage a profitable investment, and discour- 



" ROME FELL FOR WANT OF MEN." 61 

age celibacy. The speech of the Censor Metellus, in praise of 
marriage as a duty though an unpleasant one, was revived and 
read in the senate by Augustus Caesar, and a multitude of laws 
passed, but to no lasting purpose. The great famines and 
pestilences of the times of the Antonines made the ruin of the 
Empire only a question of time, lie benefits that might have 
been expected from the diffusion of Christianity and the restora- 
tion of public morality and the sanctities of the family life, 
were frustrated by the extravagant estimate put upon celibacy 
as a religious virtue. At last '• Rome fell for want of men.'' 

See Seeley's Roman Imperialism, First Essay. The name proletariat, 
given to the lower classes of the Roman population, means that the state 
supported them in idleness simply that by the growth of their offspring 
(prolea) the state might be strengthened. 

" The process of depopulation in many provinces of the 
Roman dominions, since the times of the Antonines, has been 
excessive, and unaccountable on any of Malthus's hypotheses. 
We may instance especially the north of Africa, so populous in 
the palmy days of Rome, and Asia Minor and Syria. Accord- 
ing to Merivale, Asia Minor once supported 27,000,000 of 
people. According to McCulloch, they do not now contain 
more than one-fourth of those numbers. Yet we do not find 
that they have become either unhealthy or unfertile" (Greg). 

It may be said that all this but illustrates the potent eflBcacy 
of the preventive checks. It does more ; it shows that it is 
from those checks to the growth of population, rather than from 
the growth itself, that we are to fear the most deadly injuries to 
society. 

§ 66. In modern nations the growth of numbers — as officially 
ascertained — varies so greatly as to set at nought all attempts to 
fix a o;eneral rate of increase. Nor can the difference be traced 
to the operation of preventive checks. In England the popula- 
tion doubles about once in 47 years, while the annual death-rate 
is one in 44. In France, with the same death-rate, there is 
hardly any increase, if not an actual decline. In Prussia the 
increase is as great as in England, though the death-rate is one 



62 ELEMENTS OF POLITICAL ECONOMY. 

in 32. In the United States and Lower Canada — immigration 
being deducted — the population doubles in about 40 years. lu 
some parts of Mexico much more rapidly. 

The population of G-aul in Roman times was about ten and a 
third millions ; in the fourteenth century after Christ the king- 
dom of France, about a third of the present area, contained two 
and a half millions of hearths, or between ten and eleven 
millions of people, being 32 to the kilometre (something over 
three-eighths of a square mile). In 1515 the population was 
actually less dense — 30 to the kilometre; in 1599, 34; in 
1698, 39; in 1772, 45; in 1850, 67; in 1867, 71.4; in 1872, 
67.3. The greatest rapidity was in the decade 1816-25, just 
after the Napoleonic wars, when the annual increment was 7^ to 
the thousand. By 1848 it fell to about a third of that number, 
and by 1870 it had as good as ceased. 

In England the population is said to have been almost 
stationary under the Tudors. In six censuses taken during 
the present century beginning with 1811, the rate of increase 
was found to be 14, 18, 16, 14, 13 and 12 per cent, for 
each decade. This shows a diminution during and a great in- 
crease following the Napoleonic wars, as in France. After that 
the rate fell steadily, and should it not cease to do so, the 
time will come when England, like France, will cease to add to 
her population, 

Ireland "Is x)ften quoted by the Malthusians. It is alleged 
that under the great impulse given to Irish prosperity during 
the last quarter of the eighteenth century, her population 
rose from 2,690,556 in 1777 to 5,395,456 in 1805. These 
figures do not rest upon any ofiicial census, and may therefore be 
questioned. The first is an estimate based on the returns of the 
house-tax ; the second is the computation of an individual 
statist. If it be true, then the population increased but fifty- 
one per cent, in the next thirty-six years, rising to 8,175,141 in 
1841. The failure of the potato crop under the blight of a 
single night, August 5, 1846, broke the one stafi" of life upon 
which the Irish people leaned, and the famine of 1847 followed. 



REASON, AS WELL AS FACTS, AGAINST MALTHUS. 63 

But even at that period Ireland was not as closely populated as 
England. There was no necessary pressure of population on 
subsistence, for large amounts of grain were raised for exporta- 
tion to England, and there had been no great want of food at 
home. By the year 1874, population had fallen — chiefly through 
emigration to America — to 5,301,336, a decrease of 37 J per 
cent. ; such a removal of " the pressure on subsistence '' ought 
to have produced the happiest eflfects, if Malthus be right. But 
Professor Cairnes, of Gal way, wrote in 1865 : " We fail to per- 
ceive any solid improvement, scarcely any sensible improvement, 
in the present race of daily laborers in Ireland, as compared 
with their predecessors twenty years ago." Wages have risen, 
but food has risen equally; as clothing is cheaper their " condi- 
tion is probably somewhat better physically. '^ 

§ 67. There are reasons why the Malthusian theory cannot 
be true, as well as facts to show that it is not. 

It is an ascertained law of nature that the lower any form of 
life stands in the scale of existence, the greater the rate of its 
propagation and multiplication ; the higher it stands the less its 
rate of increase. Vegetables, as a whole, therefore surpass the 
animal kingdom as a whole. A potato sprout multiplies twenty 
fold in a single year ; a grain of wheat even two hundred fold 
under favoring circumstances. The gardener who would make 
a plant propagate freely, starves it; but he knows that when by 
care and attention he has doubled its petals and brought it to an 
artificial perfection, it becomes sterile. The wild rose of the 
open fields brings its seeds to perfection ; the rose of the garden 
cannot be raised from the seeds of its like. 

So in the animal kingdom. The Clio borealis, of which vast 
shoals furnish a mouthful to the whale, multiplies by millions ; 
the whales themselves almost as slowly as man. The progeny 
of a pair of rabbits in a few years will be reckoned by thou- 
sands ; that, of a pair of wild elephants not by dozens, while 
tame elephants, though well fed and cared for, and living under 
their native skies, and allowed a large degree of freedom, cease 
to breed. 



64 ELEMENTS OF POLITICAL ECONOMY. 

§ 68. Does not this natural law continue in force when we 
compare the highest of animals with the rest ? Why should the 
whole order of nature be reversed in man's case ? The things 
that serve him as food, stand below him in the order of nature ; 
their multiplication must therefore be more rapid than his. 

Not only does the law hold good as to man in comparison 
with the animals ; it is equally true of man as compared with 
man. The higher the form of life, the slower the rate of its 
increase. Whenever any nation, or class within a nation, have 
attained to a high degree of development and culture, there is a 
reduction of its rate of propagation, and in many cases its 
extinction begins. It is proverbial that men of genius leave no 
posterity. In ancient Greece and Italy the extinction of rich 
and privileged families went on constantly. Augustus had to 
reconstruct the Roman Senate from among the plebeians, as 
only fifty families of senatorial rank were left. In France De 
Tocqueville could specify two hundred old families in one dis- 
trict alone that had become extinct from various causes within 
a century. Mr. Greg ascribes the markedly Gallic character of 
the French nation to the extinction of the superior Frankish 
race who gave their name to the country and constituted its 
feudal aristocracy. In England few of the Barons who took 
part in the Wars of the Roses are still represented in the Eng- 
lish aristocracy, and genuine pedigrees rarely extend farther 
back than the times of the Tudors. Of the Norman aristocracy 
who came in with the Conqueror, and who were one in forty-two 
of the whole population, only a single descendant was known in 
David Hume's time. In spite of new creations, the ratio had 
fallen to one in eighty-eight at the beginning of the fifteenth 
century, and to one in 12,500 at the beginning of the present 
century. A multitude of peerages are extinct for want of heirs, 
and of 1400 baronets created between 1611 and 1819, the 
families of 783 are now extinct. In the United States, 
although the rate of increase is very high, yet it is by no 
means universally so. In the New England States, the native 
population, which in two centuries grew from 45,000 to 



INCREASE IN CLASSES AND IN NATIONS. 65 

4,000,000 souls, is now increasing very slowly indeed. This 

might be ascribed to the great emigration to other parts of the 

country, but the observations founded upon the number of 

births to marriages shows this reason to be not sufficient. The 

most cautious estimate makes the number in the earlier periods 

to have been six children to a marriage ; in the later, about 

four. [Franklin (1751) says : " Marriages in America are more 

general, and more generally early, than in Europe. And if it 

is reckoned there that there is but one marriage per annum 

among one hundred persons, perhaps we may here reckon twoj 

and if in Europe they have but four births to a marriage (many 

of their marriages being late), we may here reckon eight."] On 

the other hand, the foreign population is growing rapidly, and 

doubtless will continue to do so, until it rises to the level of the 

native in education and general culture. In New York the 

census of 1865 showed that in nearly one-fourth of the families 

of that stat« no children had been born, and that in more than 

three-fourths the average was little over one child to each 

family. 

It is of course extremely probable that prudential considerations have 
much to do in these cases with the avoidance and the postponement 
of marriage, and consequently with diminishing the increase of the 
population. As society grows in wealth and in an exaggerated respect 
for wealth as an element of social standing, young people are less and 
less disposed to "begin life where their parents began ; they must begin 
where their elders left off." The only point of objection that we would 
raise to Mr. Malthus's view of this " moral check on population" is that 
such artificial and exaggerated prudence ia not a beneficent check to a 
wrong tendency, but itself a wrong and lamentable habit, — which 
detracts from the health, the happiness and the morality of the com- 
munity. 

§ 69. As of classes, so of nations. A high degree of civili- 
zation and mental culture imposes an immediate and natural 
check upon the growth of numbers. The growth of mind and 
the growth of numbers are two balancing forces, two tendencies 
that counteract each other. 

But the growth of mind is a natural result of the growth of 
numbers, unless the constitution and course of nature have been 
5 



66 ELEMENTS OF POLITICAL ECONOMY. 

wilfully or thoughtlessly interfered with by a bad social 
economy. There is implanted in the nature of the race a ten- 
dency to rise from poverty and barbarism to wealth and civili- 
zation. But this tendency has scope for its exercise only 
when man can rely upon the help and cooperation of a suffi- 
ciently large body of his fellow-men, in the work of subduing 
nature, and when association and cooperation are not artificially 
hindered or checked. The more people there are in a well- 
managed country — up to any number that ever has been 
reached or is likely to be — the better each man will be fed and 
clothed, if their industry be wisely directed. The more the 
numbers, in that case, the greater that people's mastery over 
nature, and the larger the share of the good things that will 
fall to each individual. 

Thus we find that population is self-regulative. Its multipli- 
cation brings the civilization, that is the one effectual and all- 
efficient check to all undue multiplication. '' The excess of 
fertility has rendered the process of civilization necessary ; and 
the process of civilization must inevitably diminish fertility, 
and at last destroy its excess" (Herbert Spencer). 

§ 70. Mr. Doubleday was the first who argued that a physio- 
logical reason or several of them lay at the root of these facts. 
He suggested that ample and sufficient food had directly the 
effect of lowering the fecundity of the race. There may be 
truth in the suggestion, but it is more probable that cerebral 
development has that tendency. This seems to be true even 
of the higher animals, as is seen in the case of the tame 
elephants of India. As man's brain expands, the objects of 
his desire multiply, and the natural desires common to the 
whole race lose their prominence and despotic strength. For a 
time they continue to exist in an excessive and unnatural force, 
the fruit of long ages of unrestrained indulgence, — the sur;^ 
vivals of the period of barbarism. The passion for alcoholic 
liquors, for instance, may be fairly traced back to ages whei 
I drunkenness formed the only escape from a sordid, unculture( 
I life, which admitted of no less material exhilaration. 



LENGTHENING OF LIFE. 67 

m this particular instance, the distribution of the chemical 
elements of the human frame — phosphorus especially — seems to 
be closely connected with the question. But we may well hold 
with Mr. Grreg " that other physiological causes of antifecund 
tendency are yet to be discovered ; and that races, nations and 
families would not so often die out were it not so." 

§ 71. By another compensatory law of nature, the less the 
rate of the reproduction of any form of life, the greater the 
prolongation of the life of the individual specimen. What 
nature produces with difficulty, she guards with care. 

This law also holds good between different classes of men. 
Steadily for centuries past there have been added days, months, 
years to the average length of human life, — partly from occult 
natural causes, partly from the growth of medical science and 
the adoption of wiser sanitary and hygienic methods. Thus, as 
Macaulay notes, the death-rate in London in any ordinary year 
of the seventeenth century was greater than in a bad chol'^Ta 
year of the nineteenth ; and the poorest woman in our times 
can command better medical attendance than the queens of that 
era could have obtained. The death-rate fell between 1655 and 
1845 from one in twenty-three to one in forty. French and 
German statistics show that the wealthy and educated classes 
live at least a third longer than the poor and uncultured classes. 

So again it is a mark of the great advance of Christendom, as 
compared with other groups of nations, that the great epidemics 
no longer originate within its borders. And since Christian 
governments have taken measures to put under sanitary regu- 
lations, the vast Mohammedan and Pagan pilgrimages and fes- 
tivals, which still breed pestilences, it is to be hoped they soon 
will cease. 

§ 72, Supposing that a bad social economy should check a 
people or a large mass of it in its natural growth in civilization 
and intelligence, what would be the effect on their numbers? 
That would depend upon the vitality and elasticity of the stock 
to which the people belonged. 

(1) Tn some cases, as in the provinces under Mohammedan 
rule, oppression seems to produce a depression of spirits or of 



68 ELEMENTS OP POLITICAL ECONOMY. 

nervous energy, and thereby to exercise a singularly sterilizing 
influence. The population of a besieged city is notably sterile. 

(2) More ordinarily, however, the removal of the true pre- 
ventive checks, the growth of intellect and the access of com- 
fort, tends to cause a rapid and abnormal increase of numbers. 
The starved man, like the starved plant, propagates freely. 
Reduce the people to the level of the beasts and they will 
multiply like the beasts. And so their numbers may become 
really excessive, and the mass of a community sink ever deeper 
in poverty and misery. Such a result may be expected when 
the wealth of a nation tends to concentrate in the hands of a 
few, instead of being disseminated throughout the whole people 
in something like equality. Overpopulation in such a case is 
not the consequence of natural laws, but of man's wilful inter- 
ference with them, 

§ 73. Man's history as a producer of food may be described 
as ordinarily passing through three stages. In the first he is a 
hunter depending upon the voluntary, and therefore the scantiest, 
productions of the earth that were fitted for his use. In the 
second he is a shepherd, who has mastered the services of that 
division of nature which meets his wants with most directness 
and least labor ; but he is compelled to migrate with his tribe 
when they seek new pastures, and he has no rights and no safety 
save as a member of it. In the third he is a tiller of the soil, 
a member of a body politic, possessed of a fixed home. He 
makes an acre produce as much food as hundreds did in the 
first stage, or tens in the second. He is able to act in greater 
independence of other men; able also to associate more closely 
with them. The societary circulation moves more rapidly and 
consequently more forcefully. The resistance of nature dimin- 
ishing, the pressure of population upon the means of subsistence, 
which was very great in the first stage, and great still in the 
second, in large measure disappears. It was that very 
pressure that overcame the natural inertia of man and forced 
him to press forward. "■ For his sake " the earth was accursed 
to be the home of briers, thorns and thistles, that difficulties 
might develop his power as the earth's appointed master. 



J 



•*THE MORE THE MERRIER." 69 

§ 74. Man's " power over nature" continues to grow with 
every advance in the compactness of society. Men obtain the 
use of more iron and coal, houses and ships, wool and cotton, in 
return for less labor, as society advances. When the density of 
population made it worth while to carry the water in pipes 
through the streets of our city, it was obtained with far less 
outlay of labor than when every man carried his bucket to the 
river's bank, or even to the pump, whose erection also marked a 
stage in social development. So when through the growth of 
population it becomes " worth while " to sink a shaft to the coal- 
bed, it is no longer necessary to waste wood as fuel and spend 
labor in chopping it, and the time saved can be spent in turning 
the trees into lumber or some other profitable work. Till the 
grist-mill is erected the labor of a thousand amis is expended in 
grinding grain ; the work then becomes the business of a few 
persons, and the rest have the more time for better work than 
turning hand-mills or pounding the wheat in querns. And these 
are but specimen facts that represent the whole movement of 
society. 

" From the beginning," says Herbert Spencer, " the pressure 
of population has been the proximate cause of progress. It 
produced the original diffusion of the race. It compelled men 
to abandon predatory habits and take to agriculture. It led to. 
the clearing of the earth's surface. It forced men into the 
social state; made social organization inevitable; and has 
developed the social sentiments. It has stimulated to progressive 
improvements in production, and to increased skill and intelli- 
gence. It is daily thrusting us into closer contact and more 
mutually dependent relationships. After having caused, as it 
ultimately must, the due peopling of the globe, and the raising 
of all its habitable parts into the highest state of culture ; after 
having brought all processes for the satisfaction of human wants 
to perfection ; after having at the same time developed the 
intellect into complete competency for its work and the feelings 
into complete fitness for social life, — the pressure of population 
must gradually bring itself to an end." 



CHAPTER FIFTH. 
The National Economy of Land. 

§ 75. We have defined a nation as a people occupying a con- 
tinuous area, and owning this in a more eminent sense than any 
part of it is owned by any of its citizens. Its stewardship of 
the economic interests of its people extends to the general over- 
sight of their rural economy, and calls for the careful removal 
of all obstacles — especially those of a legal kind — to its improve- 
ment and that of the people engaged in it; and also for the 
adoption of such measures of improvement as are not easily 
attainable by individual action. It may justly be said that this is 
true of the duty of the state towards any form of industry ; but 
from the peculiar relation of agriculture to the very existence of, 
the nation, the state stands in a relation of far greater responsi- 
bility here. Many of those who most incline to exclude the 
state from all activity in the sphere of industrial interests, are 
quite ready to admit that where motives of public policy call 
for interference, the landowner may fairly be treated as the 
trustee or steward of the national property, not in any absolute 
sense the owner. 

§ 76. What was said in the preceding chapter of the general 
advance of industrial methods through the growth of numbers 
and of the resulting power of cooperation, is eminently true of 
agriculture. As time advances, larger crops are reaped at a less 
cost upon lands that were early occupied, and those that were 
previously inaccessible to tillage, are cleared or drained. A larger 
amount of labor and capital becomes available, and can be ex- 
pended with perfect safety upon the same field, as the crops arej 
increased in still greater ratio. Especially the division of labor? 
contributes to this. The early agriculturist was "Jack of all 
trades and master of none." His house, his clothing, his rude 
tools, everything that he had, was his own workmanship. But 

when thes*^. are produced for him by skilled artisans, who set 
70 



EXTENSIVE TILLAGE. — MEDIEVAL ENGLAND. 71 

him at leisure to do his farm- work better, he obtains all these 
things at a less outlay of labor, and of much improved quality. 

§ 77. Early agriculture was extensive in its method ; that is, 
it expended a small capital upon a large surface. Just as the 
hunter required a larger area than the shepherd, and the shep- 
herd more than the farmer, so the bad and imperfect agriculture 
of a poor half-savage age, required a larger area than when 
methods of tillage are highly improved and the capital at the 
command of the farmer has increased. Thus we find half-bar- 
barous peoples in earlier times driven by famine from lands that 
DOW sustain a dense population. 

English agriculture in the middle ages is a case in point. As 
much of the land as is now under wheat was taken up in raising 
as much food as would now suffice for a million and a half of 
persons. The population was something between that number 
and two and a half millions; yet nearly the whole people were 
employed in producing food ; even the townsmen poured out 
into the country to help to gather in the harvest, and the Long 
Vacation at the Universities was established that their thirty 
thousand students might go home to assist. As much seed was 
sown to the acre as at present, but the average yield was 
only above one-fourth what it is now. Yet the climate of 
England, as of all Northern Europe, was warmer than it now is. 
Grapes grew plentifully in the open air, and wine was made that 
compared with those of France. " The land was imperfectly 
drained ; the working of the soil was shallow ; the manures 
employed were limited " to such as were ready at hand, at a time 
when the Flemish farmers imported English marl. " Scanty as 
the crop was, it seems to have been very exhausting, for half 
the land, in ordinary cases, lay fallow. . . Such crops as were 
obtained, were not procured without large relative expenditure." 
The agricultural implements were of the poorest ; the plough was 
a ponderous structure of wood and iron, which it took four horses 
to drag over, rather than through, the soil. Metal was so scarce, 
being mostly imported from Normandy, that the wear and tear 
of plough-iron in a dry season was a large item in the farm budget. 



72 ELEMENTS OF POLITICAL ECONOMY. 

As little hay and no green crops were raised, the sheep were 
mostly killed at Martinmas; and such as were left, with the 
oxen, starved through the winter, so that improvement of stock 
was impossible. As late as 1547, bullocks bought for the navy 
weighed less than 400 pounds. Few garden-vegetables were 
cultivated, and down to the reign of Elizabeth, they were 
imported for the tables of the rich from the Continent. This 
want and the general use of salt food spread scurvy and even 
leprosy among the people. 

See Prof. Thorold Rogers's History of Agriculture and Prices in Eng- 
land, vol. i. 

§ 78. Later agriculture is intensive ; that is, it expends a 
large capital upon a small surface. It finds at its hand sources 
of wealth that tax all its resources for their mastery, but more 
than repay the larger outlay. It goes down to the sub-soil, 
instead of spreading over the top-soil of new fields ; it finds a 
new farm under the old one. It gives up methods of rotation 
in which the land lay fallow, and adopts a new one, in which, 
through generous returns to the soil, it yields two crops a year. 
It multiplies the number of live-stock on a farm, and feeds them 
generously and under shelter, that it may obtain the means to 
overcome the natural barrenness of the soil or multiply its fer- 
tility. It masters the coldness and heaviness of clayey or low- 
lying soils by artificial drainage, so that the crop in harvest is 
advanced by weeks and the peril of the autumnal rains avoided. 
It offers the highest premium for improvements in live-stock, 
seeds and implements. " Many of these agricultural practices 
are only possible where there is a large agricultural population ; 
for which, on the other hand, work is found by these very 
practices" (Laveleye). 

§ 79. While the finest results in agriculture are achieved (as 
in parts of Saxony) by the outlay of a large capital, directed by 
large intelligence, upon a considerable area of land, — yet, with 
the actual human material engaged in farming, and in the exist- 
ing state of its intelligence, the best results, on the whole, are 
had where the farms are small and especially where they are 
owned by the actual cultivators. Progress towards the sub- 



LARGE AND SMALL FARMS IN ANTIQUITY. 73 

division of the land — up to .a certain limit — is a gain to agri- 
culture. The opposite is a retrogression. 

This fact was known even to the ancients. Solomon seems to 
refer to it when he says : " Much food is in the tillage of the 
poor;" and the Mosaic law forbade the permanent alienation of 
lands after their distribution among the people. But the law 
was evaded or ignored in the eagerness to form great estates ; 
and Isaiah denounces a woe upon '' them that join house to 
house and field to field, till there be no place, that thej may be 
placed alone in the midst of the land/' and the woe is the deso- 
lation of the land and the reduction of its average yield of food 
for man (V. 8-10). 

Under Roman rule in Italy the small holdings were swallowed 
up in the great estates of the aristocracy, in spite of the eff'orts 
of the Gracchi to preserve the patrimony of the poor. The first 
step seems to have been the enclosure (possessio) of the common 
lands {a^er publicus) upon which the common people depended 
for grazing, and which were absolutely necessary to their methods 
of agriculture. (The same process was arrested in Attica by 
the laws of Solon, but was carried out in Lacedasmon.) Pliny 
tells us the result : " Large estates have been the ruin of Italy 
{Lntifundia perdUhre Italiam)." The peninsula declined stea- 
dily in all the elements of wealth and production. The emperors 
had to obtain from Africa and Egypt the wheat that fed the 
Roman populace. The incursions of the barbarians led to the 
breaking up and redistribution of these monstrous estates, and 
Italy was able to feed her own children again. 

§ 80. In the kingdoms of Western Europe only England and 
Spain have repeated the experience of ancient Italy, and only 
the former persists in the policy that led to it. 

In these kingdoms (as in most, perhaps in all, countries in the 
earliest stage of society), the land was at first held, not by indi- 
vidual owners "in severall,'* but by bodies of freemen associated 
in a village community. Their land or mark lay, as it were, in 
two concentric circles around the village or tJiorp. The outer 
and broader was the folk-land or common on which their cattle 



74 ELEMENTS OF POLITICAL ECONOMY. 

mostly grazed. The inner circle of lands that lay next the thorp 
was divided into three fields, in each of which every marksman 
had a share, but the whole was cultivated in common by custom- 
ary methods and under a rotation of crops that left one field 
fallow and under pasture each year. In the thorp itself every 
man's house and courtyard were his personal possessions; here 
community gives way to immunity. 

Gi-radually the equality of the marksmen in possession and 
dignity gave way to a more aristocratic constitution of society. 
A manor-house, often a castle, rose above its humbler neighbors, 
and a lion's share of the mark fell to the lord of the manor, while 
upon the inferior marksmen devolved the duty of cultivating 
these demesne lands as well as their own. A social revolution, 
like the Norman Conquest of England, brought in a new lord 
of the manor, but added to, instead of removing the burdens of 
the people. The bulk of them latterly became villeins, as tenants 
who paid for their lands in the form of customary services in till- 
ing the lands of their lord a certain part of their time. The value 
of this labor was so trifling that the lord was quite willing to 
commute the service for a money-payment, so that villeins be- 
came copyhold tenants at a fixed rent. With the progress of 
society, labor rose in value and produce fell, through the former 
becoming more productive. The people grew richer; the lords 
of the manors poorer. From tenants the farmers became free- 
holders, for if the lord wanted money, the price of broad acres 
would be readily forthcoming from some old stocking hid away 
in the thatch-roof. " There can be no doubt that the lands of the 
feudal lords were largely alienated in small parcels. Many causes 
contributed to this result" (Thorold Rogers). The masters 
now sought — especially after the enormous reduction in the 
labor-supply by the black death, — to cancel these contracts and 
reduce their tenants to villeinage, requiring at their hands the . 
old services. Fortunately for the latter, the principle of custom 
or usage was all-powerful in that early age. In the absence of 
large intelligence and intellectual freedom, every established 
usage was treated as having the strongest prescriptive right. 



THE ENGLISH ENCLOSURE LAWS. 76 

The custom that fixed the form and amount of the tenant's rent 
was as valid as that by which the lord held his estates. The 
people rose in Wat Tyler's insurrection against the innovation, 
and the aristocracy, although successful in putting them down, 
relinquished their claim rather than provoke another such rebel- 
lion on conservative principles. 

§ 81. An indirect way of stopping this reconquest of the 
land by the people was found in the enclosure acts, of which 
the first was the famous Statute of Merton (temp. Henry III). 
By the provisions of these the aristocracy were authorized to en- 
close such parts of the outlying folk-land as were not necessary 
for the use of the tenants and freeholders of the manor. By 
others passed at a later date the enclosure of demesne lands 
lying in the fields of the mark itself, and consequently the 
breaking up of the old system of tillage, was allowed. This last 
measure, which involved a complete revolution in the rural 
economy of the country, was consummated by the sixteenth 
century. It was one that must have been adopted sooner or 
later. The old system of communistic land tenure imposed 
burdensome checks upon industry and enterprise; it held back 
the farmer from adopting any but customary or traditional 
methods of tillage; it took away some of the strongest in- 
centives to industry. After its abolition, although the large 
landowners turned a large part of their enclosed lands into 
pasturage, to avoid paying what seemed to them the extravagant 
wages then asked, yet such was the improvement in methods of 
tillage that there was an increase in the entire production of 
wheat. 

But this " dissolution of the ancient copartnership in the use 
of the soil, and the establishment of separate and independent 
farms in its stead," called for the most scrupulous and careful 
adjustment of rival claims both in the laws and in their interpre 
tations. Instead of this we have loosely worded statutes, passed 
by Parliaments in which the landed interest was supreme, and 
internreted by subservient and corrupt judges. Sir Thomas 
More, an exception that did honor to the bench, .tells us of 



76 ELEMENTS OF POLITICAL ECONOMY. 

*^ husbandmen thrust out of their own ; or else by covin and 
fraud, or violent oppression, put beside it ; or by wrongs and 
injuries so wearied that they be compelled to sell all." Vastly 
disproportionate shares of the common grazing lands were en- 
closed ; parts of the three fields to which the lord had no claim 
were taken in with his demesne lands. Even when the farmer 
was not dispossessed of his plough-land by force or fraud, he ' 
was often broken in spirit and in fortune by the enclosure of 
the commons, and sank into the rank of a day-laborer. " The 
peasantry lost not only the benefits derived from the right of 
common over the greater part of England, but that loss involved 
in numerous cases the loss of their separate fields. They had 
lived upon the produce of the two, and their husbandry was 
based on it," 

§ 82. The dissolution of the monasteries, and the distribution 
of the church lands among the new aristocracy created by the 
Tudors, added to the misery of the people. The new owners 
treated tenants and freeholders as possessed of no rights in the 
land. The outcry of the people could not be stifled ', it forced 
the Protector Somerset to appoint a commission of inquiry, which 
reported that the charge of wholesale and general injustice was 
fully substantiated by the evidence ; but they could suggest no 
remedy. From this period we begin to hear of a " dangerous 
class " in the alleys and back streets of English cities, where 
disbanded monks and broken agriculturists congregated. The 
yeoman class, which had been and still was the strength of the 
nation, in peace and war, at home and abroad, in church and 
state, was greatly reduced in numbers and weight, and oppressed 
by rack-rents. " My father," says Bishop Hugh Latimer, " was 
a yeoman and had no lands of his own ; only he had a farm of 
three or four pounds by the year at the uttermost, and here- 
upon he tilled so much as kept half a dozen men. He had . 
walk for a hundred sheep, and ray mother milked thirty kine. I 
He was able and did find the King a harness with himself and 
his horse while he came to the place where he should receive 
the King's wages. I can remember that I buckled his liarnesa 



I 



THE STRUGGLE OF THE YEOMANRY. 77 

wheu he went unto Blackheath field [in 1497]. He kept me tc 
school, or else I had not been able to have preached before the 
King's majesty now [in 1549]. He married my [six] sisters 
with five pounds (or twenty nobles) apiece, so [besides] that he 
brought them up in the fear of God. . . . He kept hospitality 
for his poor neighbors. And some alms he gave to the poor. 
And all this did he off the said farm, where he that now hath it 
payeth sixteen pound by the year or more, and is not able to do 
anything for his Prince, nor for his children, or give up a cup 
of drink to the poor." 

§ 83. Under the kings of the house of Stuart and under the 
Commonwealth, the yeoman class rallied as to numbers and 
weight in the nation. We find patriotic writers boasting of 
them as the glory of England and the terror of France. Lord 
Chancellor Coke speaks of one-third of England as held in 
copyhold, i. e., at rents incapable of being raised above the rates 
specified in the copy or roll of the manor. " Now copyholders," 
he says, " stand upon sure ground ; now they weigh not their 
lord's displeas-ure ; they shake not at every blast of wind; only 
having an especial care of the main chance, namely, to perform 
exactly what services their tenure doth exact, — then let the lord 
frown, the copyholder cares not, knowing himself safe." Lord 
Macaulay estimates the landowners in 1660 at 160,000, and as 
forming with their families one-seventh of the population. At 
that time all copyhold and similar tenures were converted into 
soccage tenures by being placed under the jurisdiction of the 
king's courts. Down to the middle of the eighteenth century 
the distribution of the land among small holders and owners 
was going on without interruption, but at that date it ceased, 
the tendency to concentration took its place. The subsequent 
history of English land tenure is a record of the enclosure of 
the commons without regard to the rights of the poor, — of the 
absorption of small holdings in great farms without regard to 
customary tenure, and of the extinction of the yeoman class 
without regard to the nation's higher interests. Between 1701 
and 1867 one-third of the farmed and pasture lands of England 



78 ELEMENTS OF POLITICAL ECONOMY. 

were enclosed by the rich, often by means of money loaned 
them by the state for the purpose. 

Leases are become exceptional, being rarer for nine years than 
in the Middle Ages for ninety. Much of the land is held at 
rack-rent; that is, the highest price that can be got in the op*^" 
market. The great mass of it is gathered into large estate^, 
which grow in bulk, while the number of landowners is small 
and diminishing.* . ery little of it comes into the market, and 
that is sold "at fancy prices" to rich men who can afford a 
counti^ ^at. The working classes have become more and more 
wretched and dependent; all sense of any relationship, other 
than that formed by the payment and receipt of wages, is now 
lost by both the landowner and the people on his estate. " In 
fact, there is no longer a true rural population remaining, for the 
ends, political, social and economical, that such a population 
ought to fulfil. The landed yeomanry, insignificant in number, 
and a nullity in political power, are steadily disappearing alto- 
gether. The tenant farmers have lost the security of tenure, 
the political independence, the prospect of one day farming 
their own lands, which they formerly enjoyed. And lastly, the 
inferior peasantry not only have lost ground in the literal sense, 
and have rarely any other connection with the ground than a 
pauper's claim, but have sunk deplorably in other economical 
respects below their condition in former centuries. Thus a soil 
eminently adapted by natural gifts to sustain a numerous and 
flourishing population of every grade, has almost the thinnest 
and absolutely the most joyless peasantry in the civilized 
world." ..." Once, from the meanest peasant to the greatest 
noble, all had land, and he who had least might hope for more ; 
now there is being taken away from him who has little, even 
that which he has — his cottage, nay, his separate room. Once 
there was an ascending movement from the lowest grade to the 
highest; now there is a descending movement in every grade 
below the highest." 

See Cliffe Leslie's Land Syatema of Ireland, Enyland and the Con- 
tinent. 



"a bad reason is better than none." 79 

§ 84. Attempts are made to explain this state of affairs by 
ascribing it to the operation of causes that were equally and 
even more vigorously in action when the tendency was to the 
division and distribution of the land. Thus some ascribe it 
"-•iguely to the perpetuation of the feudal system and its land 
irjnure in England. We have seen how the customary tenures 
of that system operated most powerfully to the advancement of 
the people at the expense of their lords. - a have also seen 
how those forms of tenure, with their half-defined and therefore 
objectionable rights, were finally expunged from Engli' law at 
the Restoration. And in fact the bes^. landlords in England are 
those that retain under the new forms something of the old 
spirit that made feudalism endurable, — to wit, the sense of a 
personal relationship between higher and lower, and the sense 
of a duty to the land. Their tenants have security without 
leases, for they know that no unfair advantage will be taken of 
them. As they sometimes express it, their confidence in the 
family is as good as a lease. 

Others ascribe the mischiefs of the system to the right of 
primogeniture, by which the whole estate passes to the eldest 
son, to the exclusion of his brothers and sisters. This no doubt 
is a mischievous rule, but it is one that tends to keep large 
estates undivided rather than to lead to the absorption of the 
small ones. No doubt it has the latter effect in an indirect way, 
by leaving large sums in the hands of the landowners to buy up 
these latter. But this right is not an invention of this century 
or of the last ; it was in full operation long before the decline 
of the English yeomanry began. 

Others urge the want of a proper system for the registration 
and transfer of land titles. This also is a grave mischief, but it 
is one of much longer standing than the mischief for which it 
is to account. It has not kept the rich from buying up the 
estates of poorer men. 

§ 85. The true cause, as Coleridge pointed out, is the im- 
portation of purely commercial maxims into the rural economy 
of England. The trading spirit attained in England the as- 
cendancy it has ever since possessed, about the time when the 



80 ELEMENTS OF POLITICAL ECONOMY. 

separation of the mass of the Euglish people from the soil 
fairly began, viz. : the middle of last century. English political 
economy from Adam Smith down, with some notable exceptions, 
has been the exponent and the justification of that spirit. It 
has shaped public opinion, controlled the tenor of legislation, 
and controlled the direction of the industry of all classes. It 
has stripped the landlord of all notions of stewardship for the 
nation and duty owed to the land and the people who till it. It 
has led men to regard tha production and cheapening of com- 
modities as the one great end of all activity. It has sacrificed 
men and their personal interests to things. 

Now in trade the law of parsimony is the supreme law. For 
trade aims at getting as large and as quick returns as possible, 
with the least possible expense in managing and collecting these. 
Trade can make no distinction between persons and things ; it is 
(in a low sense) no respecter of persons. It sets aside the dearest 
friend or the worthiest object of pity, and takes the offer of the 
man who bids highest and offers the best security. Other 
things being equal, it prefers the largest purchaser to any other, 
and even abates the price in his favor ; for the ultimate object 
being to get wealth enough to be rid of the trouble of getting 
it, the offer that involves least trouble is the best. 

Apply these maxims to the management of an estate, and the 
problem becomes one of getting the largest returns with the 
least outlay in wages and food. All question of the well-being 
of the small farmer and the laborer is lost sight of. The hold- 
ing of the former was taken in with other lands to make large 
farms, that the landlord might have fewer tenants to deal with 
and less trouble about his rents. The latter were systematically 
and designedly brought into a position of dependence, because 
they were thus the more easily managed. Their cottages and 
gardens, for instance, were let to the tenant-farmer with the 
understanding that he would see to repairs, and then the cot- 
tages were re-let by him without the gardens, that their sole 
dependence might be their wages. The wages-roll was cut down 
to the utmost, because the less labor the less expense ; the 
majority of those who had lived by the land were driven to the 



THE "SCIENCE FOR WEALTH." 81 

cities, and only a fraction of the people of England now live 
by agriculture. 

See Coleridge's Works; VI, 215-25 (Araer. Edition). 

Did the English economists raise their voices in protest, 
when the highest interests of the nation were thus imperilled ? 
They said : " We have nothing to do with those moral and 
political questions ; we have no advice to offer. Only be it 
known to you that additional labor employed in manufactures is 
more, when employed in agriculture is less efficient in propor- 
tion." They left men to draw the inference that it was a 
national advantage when labor was withdrawn from work where 
it could not be effectively concentrated, and transferred to the 
cities and factories where it could. Furthermore they furnished 
them with the factory system for application to tillage, — the 
capitalist furnishing the means, and the actual worker on the 
land being reduced to the rank of a day-laborer. They applied 
to farming " the machinery doctrine of most produce from least 
labor," which is " the doctrine of starvation to the laborer, and 
dispossession to the small proprietor, and instead of belonging to 
the advance of knowledge is a retrogression" (Wren Hoskyns, 
M. P.). 

" Political writers and speakers of this school have long enjoyed the 
double satisfaction of beholding in themselves the masters of a difficult 
study, and of pleasing ' the powers that be ' by lending the sanction of 
'science ' to all established institutions and customs, unless, indeed, the 
customs of the poor. Instead of a science of wealth, they give us a 
science /or wealth." (Cliffe Leslie.) 

§ 86. The system may be a failure socially and politically ; 
but the chief question for us here is — Is it an economic success 
or a failure ? A study of its general features and a comparison 
with what we find in other countries leaves no doubt that, in 
spite of brilliant successes in many matters of detail, English 
rural economy is, on the whole, a failure, when regarded. from an 
economic point of view. 

(a) It has failed by displaying a lack of aggressive power. It 
has gathered up into large farms the areas previously cleared 
and brought under cultivation by the small farmers of the past; 
6 



82 ELEMENTS OF POLITICAL ECONOMY. 

it has in some degree improved upon their methods. But it 
has not evinced any ability to cope with and bring under tillage 
the vast area of English soil that still lies in a state of nature. 
A committee of the House of Lords of the session of 1873, 
after a searching investigation, reported that " the improvement 
of land, in its eflFect upon the price of food and upon the 
dwellings of the poor, is a matter of public interest; but that 
as an investment it is not sufficiently lucrative to offer much 
attraction to capital, and that therefore even slight difficulties 
have a powerful influence in arresting it." As we have seen, 
seven and a half millions of acres in England alone still yield no 
food for man or beast, — contribute simply nothing to the support 
of the nation. The only proposal made to attack these masses of 
unsubdued nature is, so far as we know, a proposal to divide them 
up into small farms. In some cases, especially in the Highlands 
of Scotland, the peasantry have been encouraged to enclose and 
fertilize small patches of waste ground that nobody else would 
touch. At the expiration of their nine years' leases they are 
commonly ejected, and their little Jiolms or farms are taken into 
the larger farms. " I could name many," says a Scotch land- 
agent, " who use this crofting for their waste lands, and then 
turn out crowds of them and throw their land into large 
farms." 

(b) It has failed to develop the natural powers of the soil. 
Were even the area that is now under tillage to be cultivated 
as experience, both in England and elsewhere, shows to be per- 
fectly feasible, the country would be under no necessity of 
depending upon foreign harvests for her supply of food. Eng- 
lish soil has been made to yield 57 to 60 bushels of wheat to the 
acre without exhaustion. The average yield is much less than 
half so much. It is so, because only the merest fraction of that 
soil has been treated as the scientific knowledge of our days 
suggests, and because the amount of capital laid out upon the 
land under the system of large farms is about half as great as 
would be expended by small farmers of thrift and intelligence. 

(c) But the fundamental mistake and failure has been in the 
treatment of the human material of her agriculture. She has 



FAILURE IN ENGLAND AND IRELAND. 83 

failed to briog into exercise one of the most powerful and effi- 
cient motives to thrift «.and industry that exists in the human 
breast, viz: the attachment of the small holder to the spot of 
earth that is his own, his home. That passion for the posses- 
sion of land, which is elsewhere a source of publia security and 
social permanence, she has made a source of public instability. 
By all the tenor of her legislation and the drift of her public 
opinion, she has helped in the work of sundering the workman 
from the soil, and of either driving him away from it to the city 
or retaining him in the pitiable position of a day-laborer at the 
lowest rate of wages consistent with bare life and shelter. She 
has taken no pains to diffuse the intelligence and scientific 
knowledge that would fit the rural classes to till the land as the 
needs of the country and the time demand. She has left them 
at the mercy of the squires and the farmers, growing every day 
more brutal and hopeless. " They are unable," says Canon 
Girdlestone, " to lay by anything. They are long-lived, but 
even in their prime are feeble ; and at the age of fifty often crip- 
pled with rheumatism, the result of poor living, sour cider, a 
damp climate, hard work and anxiety combined. There remains 
nothing for them then but the parish-pay and the workhouse." 
87. In Ireland the English conquest, begun in 1169, found 
the people still in the tribal state. The land generally was owned 
by the tribe, and the chiefs rights extended little farther than to 
temporary maintenance during his constant peregrinations. The 
conquerors displaced the chiefs by Norman barons, who held the 
land under conditions similar to those which prevailed in Eng- 
land at that time. Not until the completion of the conquest, in 
the reign of Elizabeth, was there any disposition to disturb the 
common people. In that and the succeeding reign great areas 
of Irish soil were " planted " with English and Scotch settlers 
after the extrusion of the previous tenants, and the jurisdiction 
of the English common law was extended to the island, setting 
aside all the native customs of tenure and inheritance. The 
plantation of Ulster, chiefly by Scottish settlers, was the largest 
of these operations until the era of the Commonwealth. Crom- 



84 ELEMENTS OF POLITICAL ECONOMY. 

well, after the conquest of Ireland in 1652, formed a plan to 
drive the native population into Connaught and settle the three 
other provinces from the sister-island. This barbarous policy 
was carried out as far as was possible, and the people — rich and 
poor — stripped of their lands. At the Eestoration a very im- 
perfect restitution was effected, and the attempt to make the 
restitution complete under the reign of James II. was defeated 
by the renewed conquest of the island under William III. The 
destruction of Irish manufactures by hostile legislation in this 
reign produced a state of wretchedness worse than any caused 
by mere conquest and confiscation. It forced the people to secure 
land on any terms. They became tenants-at-will at rack-rents, 
with the certainty that the improvement of their lands would 
lead to a rise in their rents. For six generations past the labor 
of Irish tenants in reclaiming lands, erecting houses and fences, 
and adding to the value of their holdings has been confiscated 
by their landlords, who hardly ever lay out any money upon such 
improvements. There are exceptions, but this is the very general 
rule. As a consequence, the Irish people have had no motive to 
improvement. They became disheartened and wasteful farmers. 
As the English demand for meat and butter seemed to furnish 
a better return to the landlord, great bodies of the people have 
been at various times evicted from their holdings to make room 
for grazing-farms. If they could not manage to make their 
way to America, these tenants had to settle on any bare moun- 
tain-side or barren peat-bog, where they find shelter and obtain 
for a good price the privilege of growing, on land quite unsuited 
for the purpose, enough potatoes to keep them alive. The 
worst of these evicting landlords were those who obtained 
their lands on the sales ordered by the Encumbered Estates 
Court (1849-1859). 

The inducement originally held out to Scotch and English seU 
tiers was the offer of " tenant-right" — i. e., compensation for uu 
exhausted improvements, and free sale of the good-will. Thii 
bargain was very generally broken by the landlords. Scotch settler 
of Ulster found that they could not depend upon these promises 



IRISH LAND LAWS. ' 85 

and to save themselves from ruin they emigrated in great num- 
bers to America (1720-1770). 

The recent land acts of 1870 and 1881 have for their purpose 
to terminate this confiscation of improvements and of tenant-right. 
They allow the land-courts to fix what would be a fair rent for 
the land, independently of the improvements the tenant has 
made. They punish with a Keavy fine the eviction of tenants 
who are paying a fair rent, and they allow the tenant to dispose 
of his tenant-right when he decides to throw up his farm. The 
landlord himself can buy this at a valuation if he so wishes. 

See Prendergast's Cromwellian Settlement of Ireland; Sir Gavan 
Duffy's Young Ireland; Mr. Sullivan's JVeio Ireland; and Mrs. Mar- 
garet T. Sullivan's The Case of Ireland (Philadelphia^ 1881). 

In the Scottish lowlands the history of land tenure has run 
much the same course as in England. In the Highlands the 
tribal tenure lasted until 1748, the lands being the property 
of the whole clan, and the chieftains being chosen by the people 
and liable to be deposed if unpopular. In that year the British 
Parliament abolished the hereditary jurisdictions of the chiefs, 
and authorized the crown to give to each of them a baronial 
title to the lands of their clan, if they would surrender their 
chieftainship. Under this law the whole of the Highlands have 
been confiscated from the people and converted into private 
estates. The clansmen, from landowners, have become tenants, 
holding at the proprietor's pleasure. Great multitudes of them 
have been evicted to make room for deer forests and sheep pas- 
tures ; others have seen their little holdings absorbed into large 
farms held by capitalist farmers. The towns, the sea-coast, and 
America have received the people of the Highlands, which now 
could not furnish one-tenth of the great military contingent 
which was raised eighty years ago for the war with France. 
The most cruel evictions were those of Sutherlandshire, in the 
second decade of the century. The whole interior of this great 
shire was depopulated, sixteen thousand tenants being driven 
to a barren sea-shore or to America. The heather was fired in 
early spring to destroy the pasture and force the immediate sale 



86 ELEMENTS OF POLITICAL ECONOMY. 

of their cattle. Their homes were burnt above the people's 
heads to effect their expulsion. Delicate women died of the 
shock, old people lost their reason ; but not a hand was lifted 
in resistance or revenge. When removed to the seashore they 
were required, after hard and unaccustomed labor in fishing, to 
aid in the erection- of new homes under the direction of the 
agent. For farming they had nothing except a few patches of 
soil on the ledges of the rocks. 

See Mr. John Murdoch's "Letters on the Sutherland Evictions," in 
the Mark Lane Express. The history of those evictions has been mis- 
represented very elaborately in various works of reference, and in Mrs. 
H. B. Stowe's Sunny Memories of Foreign Lands, although their charac- 
ter was exposed very fully by the report of the Parliamentary Commis- 
sion on the Scottish Poor Laws. One of the actual victims, a High- 
lander in Canada, prepared a reply to Mrs. Stowe's chapter on the 
subject, which he called Gloomy Memories of the Sutherland Clearances, 
but his sudden death just after his book was printed prevented its get- 
ting into circulation, and it is now exceedingly scarce. 

In very few instances have the tenants of the large farms prospered in 
their new holdings. Many of them have thrown up their farms and left 
the country, and the landlords would be glad to relet to small farmers, but, 
having allowed the farm-buildings of the ejected tenants to fall into decay, 
they cannot secure such tenants without making large outlays in repairs. 

§ 88. Passing from England to the Continent, we find the 
rival nations growing in the sort of strength that was once but 
is no longer the boast of England, the yeomanry. In France 
small proprietorship was the rule even before the Revolution. 
The old records abound in accounts of their purchases. It was 
their wretchedness under the excessive burdens of the Old 
Regime, when they paid nearly all the taxes, that led Arthur 
Young to prefer large farming; yet he admits that the peasants 
of many parts of France were prosperous, industrious and thrifty. 
They had risen to that state out of the deepest degradation. In 
the middle ages they could not stand against the English 
yeoman, because they were little better than slaves. The free 
play of economic laws steadily bettered their condition, an 
vested in them more and more of the soil. The Revolution 
abolished all customary tenures, but it threw the royal demesMies 



PRUSSIAN LAND LAWS. 87 

and the estates of the nobility upon the market, and abolished 
the right of primogeniture, besides releasing the peasantry from 
the burden of excessive taxation. The number of large estates 
rapidly declined ; that of the actual landowners has immensely 
increased. The soil of France is now owned by more than four 
millions of her people. M. de Lavergne, often quoted by Eng- 
lish economists as approving of the English system, says : " x\.ll 
the world accepts petty proprietorship not only as a necessity, 
but as a benefit. It is recognised as favorable to agricultural 
productiveness and to public security." To it France owes her 
vast wealth and her wonderful financial elasticity, exhibited in 
her management of the immense debt incurred by the last war. 
In many respects" French agriculture has much to learn from 
that of England ; but if the history of each for the last two 
hundred years be taken for comparison, the result will be a 
iudgment greatly in favor of the former. 

§ 89. Belgium is the strongest case in favor of small farms 
and intensive culture. The farmer in the Flemish provinces 
lays out twice as much on an acre as is done in England. Farms 
are continually divided, and with every division their yield of pro- 
duce has increased. Vast quantities of horned cattle and of 
green crops are raised; wheat, indeed, is imported, but paid for 
by exports of meat and vegetables. East Flanders has and feeds 
1800 people to every square mile of her barren soil. The small 
owner generally saves half his income, and is continually on the 
outlook for more land. The farms are mostly between five and 
seven acres in extent. Most of the land, indeed, is farmed at 
rack-rents on nine years' leases, with " customary" compensation 
for unexhausted improvements ; but a large proportion is stead- 
ily passing into the hands of small holders, who, as in France, 
outbid all other competitors. So strong is the hunger for land 
that it is bought up with full knowledge that it will not give as 
high rate of interest upon capital as is offered by the money- 
market. The people are poor through the lack of all large in- 
dustries and the market they give for labor and for food, and 
the consequent tax of the cost of transportation upon most of 



88 ELEMENTS OF POLITICAL ECONOMY. 

what they need besides food. But their poverty is disappear- 
ing; want and destitution are becoming more rare ; agricultural 
methods are rapidly improving; the country is tilled like a 
garden, yielding several heavy crops every year, and presenting 
the most beautiful and civilized appearance of any in the world. 
§ 90. In Prussia the mediaeval system held its ground down 
to the beginning of the present century. The government 
" saw with terror, in 1808, how insecure was a state which had 
so great a claim on the bodies^ and none at all on the hearts of 
its people" (Gustav Freytag). Some opposed change. The 
bauer was stupid, lazy and thriftless, it was said ; nothing could 
be made of him. A government commission met at Memel in 
1807 to draft a land-law that should effect the transition from 
the mediaeval to the modern agriculture. They found them- 
selves divided into two parties : on the one side the great states- 
man Stein, the great historian Niebuhr and his friend Stage- 
mann ; on the other a group of now-forgotten doctrinaires, who 
had studied English political economy under Kraus at Koenigs- 
berg. The latter wished for a policy that would secure the 
maximum of production from the soil, independently of the 
welfare of the producers. " They held it indifferent whether the 
present feebler proprietors remained or not, if their place was 
supplied by wealthier ones, and thus the greatest possible 
amount lof profit secured." They preferred, indeed, th'at the 
change should take that shape, following the English commer- 
cial maxim : " most produce by least labor." " Why," they 
asked, " waste the productive force of four proprietors and six- 
teen horses to do that which one proprietor and six horses can 
do better ?" The other party " considered the promotion of the 
welfare of the actually-existing occupants of the soil as the true 
problem of the statesman ;" else they " saw the likelihood of 
obtaining a class of proprietors who would have no moral interest 
in the welfare of the country, and they felt the importance of 
a numerous class of small landholders." Happily their counsels 
prevailed; the transition was effected by impartial legislation, 
and not on English principles nor by English methods. The 



! 



LAND TENURE ON THE CONTINENT. 89 

peasant secured the complete control of his own labor, and rose 
from a state of villeinage to the freedom of a landowner ; in re- 
turn he ceded to his former master a portion of the land he had 
held, retaining the rest in fee simple. AH restrictions on the 
sale of land were removed, and provision was made for cutting 
off entails. This measure was enlarged and extended to all parts 
of the kingdom in 1811. It aimed at the highest end of 
national economy, the welfare of the people ; it secured the 
lower also — the maximum of production from the soil. 

Since its adoption, the yeoman class has grown in numbers, 
wealth and independence. In Westphalia especially, land con- 
stantly passes into their hands by purchase. Its price has 
risen rapidly; it rose seventy-five per cent, between 1829 and 
1813. The bulk of it is now in the hands of the actual tillers 
of the soil ; the agricultural methods are very greatly improved, 
and the hauer is now proverbial for thrift and industry. 

§ 91. Switzerland takes rank next to Belgium in the per- 
fection of its intensive culture, and the density of its popula- 
tion. Every foothold of ground is occupied; if the clefts of the 
rocks contain no soil, it is carried thither. 

Norway with its rocky surface, and Denmark with its alterna- 
tions of peat and gravel, would be — like Flemish Belgium — in- 
accessible to any sort of agriculture that did not bring into play 
the entire devotion and earnestness of their people. In both 
the greatest difl&culties have been overcome and the largest out- 
lays of labor rewarded. 

Russia, in the emancipation of her serfs (1861), had to solve 
the problem that was before Prussia half a century earlier. The 
large proprietors and the students of English political and rural 
economy wished to see the land vested in the nobility, and the 
bulk of the peasantry reduced to the level of day-laborers. But 
the aristocratic party had lost its prestige through its failure to 
carry the Crimean war to a successful issue. The government 
secured to the serfs the right to purchase at a moderate rate 
enough arable and pasture land for the needs of each village, 
and undertook to collect the payment in small annual instal- 



90 ELEMENTS OF POLITICAL ECONOMY. 

ments and pay it over to the landowners. That the economic 
results of the measure are as yet anything but satisfactory must 
be admitted. This is due (1) to the virus of slavery still poison- 
ing the minds of the people and leading them to regard work as 
a curse and a disgrace ; (2) to the system of taxation, by which 
the public burdens are thrown chiefly upon the peasantry ; and 
(3) to the fact that the system of communistic land tenure is 
still kept up in Russia, and in such a way as to deprive the 
peasant of many of the most powerful impulses to industry, im- 
provement and thrift. 

In Italy, the plains of the north are under petty culture, and 
the excellence of the agriculture is proverbial. In Tuscany the 
lands are farmed in larger portions on the Tnetayer system, the 
landlord and tenant dividing the crop equally. To pass from 
Lombardy to Tuscany, is to go from better to worse ; but to cross 
the Tiber to what was the Papal States and Naples, is to come 
into a country of large farms, in which beggary and bad tillage 
deface the earth. The yield is much smaller, and the rural 
methods are those of the days of Hildebrand, if not of Cato the 
Censor. 

§ 92. Another chief point in the economy of land is to secure 
and preserve an equilibrium of the three great elements of the 
industrial state — the agricultural, the commercial and the manu- 
facturing. To cherish and foster agriculture alone is not to 
cherish it at all. The farmer's work, unless misdirected and 
wasteful, produces more than furnishes food for himself and 
his household. Were it otherwise the whole population would 
have to be employed in agriculture, as was the case in the earliest 
period of the art. The existence of such a surplus sets free a 
part of the population to engage in work of producing other 
things that society counts among the necessities and comforts of 
life. When this class, and the number of persons needed for 
the exchange of the products of both classes, are large enough 
to consume the ordinary surplus product of the farming class, 
the three classes stand in equilibrium ; the farmer is assured of 
a Diarket for his crop, and of a fair exchange of other objects 



THE EQUILIBRIUM OF THE INDUSTRIES. 91 

of desire for what he can spare. But if these two classes are 
not large enough to consume his surplus, the equilibrium does 
not exist, and the farmer must suffer accordingly. His 
labor goes for nought ; his crop rots in the fields, or if gathered 
and taken to market, brings a trifling price because farmers are 
underbidding each other for the small sales that are possible. 
In our Mississippi valley, for instance, the equilibrium of the 
two classes has not yet been attained. " The burning of corn 
for fuel in the West, of which we hear dismal stories once in 
seven years, is an indication that too many people there are en- 
gaged in farming and too few in manufacturing " ( The Nation^ 
New York, 1869). 

In the absence of a sufficient home market, the foreign demand 
for breadstuffs and other farm produce is the only dependence 
of the farmer. For reasons hereafter given, the exchange of 
raw produce for manufactured goods between distant points can 
never be a remunerative one for the producer of the former. 
Were the rural economy of every nation wisely managed, no such 
exchange could take place 3 save in years of extraordinary scarcity 
the transportation of large quantities of breadstuffs and the like 
across the seas would not be thought of. The foreign market 
can therefore last no longer than the bad management of a few 
densely peopled countries lasts ; with every advance in agricul- 
tural methods and rural economy it must threaten to disappear. 

And even while it lasts it is the most uncertain of all markets. 
The farmer who depends on it takes the risk of two harvests in- 
stead of one. If the foreign country have a bad harvest, and 
so need much grain, while his own country's harvest is not too 
good, he may get as fair a profit as the nature of the case per- 
mits; in any other combination of circumstances he will not. 
Still more complicated are his chances when other nations nearer 
the foreign market are competitors to supply its needs. In 
that case his success depends upon their comparative failure also. 
Worse still, the price he can get for what he sells at home is 
fixed and regulated by that of what he sends abroad ; if a large 
surplus, raised for the foreign market, be left on his hands, 



92 ELEMENTS OF POLITICAL ECONOMY. 

prices will rule low in the home market also, because he and hie 
fellow-farmers will be uaderselling each other in competing to 
supply its demand. 

§ 93. The farmer who depends upon a distant market can 
never carry on his farming by the best methods. He cannot 
raise that variety of crops by which the pressure of tillage upon 
the resources of the soil is lightened ; for such crops cannot be 
transported to a distance. He must grow the great staples that 
meet the foreign demand, year after year, to the exhaustion of 
the most important elements of his land. He cannot make such 
returns to the soil as will keep up its fertility ; the refuse of 
the factory and the town are not to be had. The highly nitro- 
genized forms of animal manure he can procure in trifling 
quantities only, as his own cattle and those of his brother 
farmers are the only beasts of the sort in his neighborhood, and 
are far fewer in number than if he had a town close at hand 
making large demands for meat and dairy produce. He can 
only farm thriftlessly and wastefully ; in our Eastern sense of 
the word his place is not a farm, but a wheat factory or a corn 
factory. The farmer who lives near his market is continually 
improving an instrument of great power and value; he who 
lives at a distance from his market is continually injuring it and 
breaking it. The one is adding every year to the wealth of the 
soil beneath his feet; the other is exporting that wealth to a 
distance, without the opportunity of making any return to the 
soil he is robbing of its fertility. 

The census of 1870 exhibits the undue prepcmderance of agriculture in 
the states we have referred to. In six Western States fifty-four per cent, 
of those who report any occupation were engaged in farming, while of 
the whole population of the United States so reported only forty-seven 
per cent, are farmers. In nine Southern States, from North Carolina to 
Texas, the proportion is as high as seventy-five per cent. 

The six "Western States have nineteen per cent, of the national popu- 
lation ; but they raise forty per cent, of the whole corn crop, and forty- 
two per cent, of the wheat crop, while of all other crops they raise less 
than their share. Their industry lacks variety, being chiefly agriculture ; 
their agriculture lacks variety, being chiefly the growth of cereals. In 
1872, when the English demand for American broadstuffs was much above 



RICARDO'S " LAW OF RENT." 9S 

the average, Illinois produced enough to feed all her own population, and 
to supply the whole English demand, at that rate, for ten years. Soe a 
very able article on- " The Farmers' Difficulty," by Edward Stanwood, in 
Old and Xew for September 1872. 

§ 94. The theories of the national economy of land which 
pass current with the English economists seem to be suggested 
by their practice. Like the theory of population discussed iu 
the last chapter, they seem designed to excuse the anomalies 
and miseries of English society, by throwing the blame on the 
natural laws which govern and condition the growth of society. 

Indeed, the chief of the English theories about land grew 
directly out of the Malthusian theory of population. In the 
last statement of that theory, that Mr. Malthus made (1826) he 
concedes to his numerous opponents that so long as good land 
was to be had, "the rate at which food could be made to in- 
crease would far exceed what was necessary to keep pace with 
the most rapid increase of the population " possible. This 
shows that the whole question turns upon the relation of man to 
the soil. 

The " theory of population " is therefore the parent of the 
" theory of rent" announced by David Ricardo in 1815, and 
designed to explain the way in which the growth of society 
makes the few rich and the many poor, by inuring chiefly to 
the benefit of a class of monopolist* called landlords. In his 
view, rent arises from the insufficiency of good land to supply 
the entire people. The first settlers of a country take possession 
of the best lands; the second set of cultivators are obliged to 
take those that are worse, or pay nearly if not quite the differ- 
ence in rent. When the second grade of land has been settled 
up, the next set must take up a third grade, or pay nearly if 
not quite the difference in yearly value for a share of the first or 
second. Thus as the growth of numbers requires the tillage of 
an ever larger area of the soil, each higher grade of land pays 
an increasing rent. With every advance in population men are 
driven to poorer and more wretched soils, and the monopolists 
of the higher grade of lands are able to live in idleness and 



94 ELEMENTS OF POLITICAL ECONOMY. 

plenty upon their continually increasing share of the growths t/f 
the soil. The only limit to the process will be reached when 
the only land that is unoccupied is too poor to repay cultivation. 
The rent that can be secured for any given piece of ground will 
be nearly if not quite the diflference between its annual yield 
and that of the poorest lands under cultivation. 

§ 95. To show what Mr. Ricardo asserts to be the tendency 
at work as a country grows in density of population, let us sup- 
pose the case of an island divided into a number of areas equal in 
extent but of various degrees of fertility, and each large enough 
to employ a hundred laborers. The best land in the series can 
produce (let us say) 900 bushels of wheat, giving nine bushels 
to each laborer if there be an equal division. The next best 
will produce (let us say) one-tenth less or 810 bushels, giving 
1710 (or 900 plus 810) bushels to be divided between two 
hundred workmen ; and so on. If the population double every 
twenty-five years, as Mr. Malthus says it may, the following 
table shows what the growth of population and of sustenance 
will be in two centuries : — 



Years. 


Persons. 


Bushels. 


Share. 


1 


100 


900 


9. 


26 


200 


1,710 


8.151 


51 


400 


3,150 


7.875 


76 


800 


5,670 


7.0875 


101 


1,600 


9,990 


6.243 


126 


3,200 


17,190 


5.37 


151 


6,400 


31,710 


4.92 


176 


12,800 


48,990 


3.8 


201 


25,600 


72,030 


2.8 



But on the theory of unequal division propounded by Mr. 
Ricardo, the owners of the lands last occupied would not get 
2.8 but only 1.8 bushels each, and the amount which fjills to 
them is just or almost the share that falls to the tenants oF any 
of higher grade. The difi'erence between that share and 
the actual annual yield is absorbed in rent. If the entire seven 
grades of superior land is leased to tenants, its owners absorb 
nearly if not quite 25,950 bushels as their royalty on the use of 



POPULARITY OF RICARDO'S "LAW." 95 

the land, leavinoj 46,080 bushels to the actual workmen. The 
denser the population, therefore, the greater the misery of the 
people, and every growth in their numbers increases their own 
poverty and adds to the wealth of these monopolists. 

§ 96. This doctrine found eve"n more acceptance with the 
English school, and elicited far less criticism and opposition, 
than that of Mr. Malthus on population. It was a more direct 
and explicit apology for the anomalous state of things in Eng- 
land; it explained how a nation might grow in wealth while a 
very large share of its people sank ever deeper in poverty and 
misery. It was a still more explicit and satisfactory verdict of 
" Nobody to blame," — a still clearer excuse for the absence of 
effort to amend things. Mr. J. S. Mill goes so far as to pro- 
nounce this law of rent and of the increasing sterility of the 
land brought under cultivation, to be the very corner-stone of 
the science. " After a certain not very advanced stage in the 
progress of agriculture ... in any given state of agricultural 
skill and knowledge . . . every increase of produce is obtained 
by more than a proportional increase in the application of labor 
to the land. This general law of agricultural industry is the 
most important proposition in Political Economy. Were the 
law different, nearly all the phenomena of the production and 
distribution of wealth would be other than they are." An 
American writer of the same school says : " It is natural — and 
if natural, proper — though we may not see the reason — that 
poverty and want, and disease and misery, should be the next- 
door neighbors of wealth and unbounded prosperity." 

§ 97. On Mr. Ricardo's theory that land derives its value 
from the natural properties of the soil, and not from the labor 
expended on it, and that landlords are a class of monopolists 
who have possessed themselves of it, and thus managed to make 
the growth of society inure chiefly to their own benefit, the 
right of ownership in land is one that rests on no suflBcient 
foundation, and one that many of the interests of society call 
upon the state to set aside and destroy. Mr. Ricardo himself 
was no friend of these " monopolists," and his school are as little 



96 ELEMENTS OF POLITICAL ECONOMY. 

SO. Especially in late years they have been given to using 
phrases that strongly resemble the utterances of those com- 
munists, who would have the right to landed property, if not to 
all property, repudiated by society. They have held up the 
land-tenure of their country as the source of nearly all its social 
evils ; they have insisted that the nature of landed property is 
such that it is both the right and the duty of the state to inter- 
fere with it in ways that would be public robbery if applied to 
other sorts of property; they have declared that the ownership 
of land — in contrast to the ownership of other things — is a 
public trust, a stewardship of which the nation may exact an 
account. The offspring of these teachings is the Irish Laud 
Law of 1870, by which the landowner is forbidden to rent his 
land for the price that it will bring in the open market. All 
contracts are to be on terms that an Irish judge shall decide to 
be reasonable, and when the lease expires the tenant cannot be 
ejected unless paid for his good-will and improvements. 

§ 98. Do the facts of history bear out this theory ? If they 
do we shall find (1) that in any given area the amount of the 
produce of the land obtained in earlier times is greater in pro- 
portion to the number of laborers ; (2) that of two countries, 
or two districts in the same country, if other things be equal, 
the one that is poorest in people is the one in which the average 
degree of personal wealth and comfort is the highest; (3) that 
the share that falls to the landlord increases, and that which 
falls to the laborer diminishes, as more land is brought under cul- 
tivation. 

Not one of these results is sustained by observation. The 
fleets alleged in the previous chapter in regard to the con- 
dition of savage nations, and of civilized peoples in the earlier 
stage, show us that the thinly-settled countries are those in 
which continual poverty prevails, and frequent famines occur. 
In the first and the second points, therefore, the theory diverges 
widely from the facts. 

On the third point — the increasing share of the landlord, as 
distinguished from an increasing amount — the theory is equally 



ENGLISH AND FRENCH HISTORY. 97 

at fault. With the growth of society in numbers, in intelligence, 
in the efficiency of its workers, the landlord obtains a continually 
increasing amount, but a continually decreasing share. His 
third falls to a fourth of the produce, but the fourth is more 
than the third was ; the fourth becomes a fifth, but the 
actual amount is still increased. Adam Smith pointed this out 
as the difference between the times when feudal bondage existed 
in Europe and the whole crop fell to the landlord, and his own 
day when the landlord took a third or a fourth part of the pro- 
duce, but got three or four times as much as the whole had once 
amounted to. 

Mr. Malthus showed from official returns that in England the 
landlord in his day took but a fifth of the crop in rent, and yet 
got a larger quantity than in previous ages when his share had 
been one-fourth, one-third, or even two-fifths. We have it on 
equally high authority that between 1790 and 1833 the amount 
got by the landlord had doubled, while the improved condition 
of the laborer showed that the increase had not been at his ex- 
pense. Mr. Senior says that the improvements in England 
between 1776 and 1836 had " more than doubled the wages of 
labor and nearly trebled the value of land.'^ 

These results are not open to question ; they have been reached by 
competent statists, all of them of the school of Ricardo. 

The official figures in regard to France show that of the gross 
produce of the culture of the soil, 35, 37, 43, 60 and 60 per 
cent., had been paid as the cost of cultivation at the dates 1700, 
1760, 1788, 1813 and 1840, and that the yearly sum that fell to 
each family engaged in agriculture at each date was 135, 126, 
161, 400 and 500 francs respectively. Comparing these figures 
with the price of bread at each date, we find that the people of 
France had not much over half enough to eat under Louis XIY. j 
about two-thirds of enough under Louis XV. ; three-fourths 
under Louis XVI., and more than enough under the Empire. 
The minister D'Argenson in 1753, a year of no special scarcity, 
says : " Men die around us like flies and are reduced to eat 
grass." The Duke of Orleans brought a loaf of fern bread to 
7 



^8 ELEMENTS OF POLITICAL ECONOMY. 

the Royal Council, and placing it before the King, his brother, 
said : " Sire, see what your subjects live upon V The returns to 
labor in France are by no means what they ought to be even 
now. France is more fertile than England, yet two-thirds of 
the French people are engaged in producing food for the nation, 
against one-third of the English ; and with all, the latter are 
better fed and more prosperous generally. Furthermore, one- 
sixth of the soil of France is covered with forests ; one-twenty- 
fourth of England. If Mr. Ricardo be right, this should mean 
that the pressure of population has not yet brought the French 
nation to the cultivation of the poorer soils, and that the acre- 
age under tillage yields a larger average of bushels than in 
England. But notoriously the reverse of this is true. And if 
we compare department with department, it is found that the 
most populous parts of France are also those in which the yield 
per acre and the consumption of food per head are both greater, 
and the quality of the food better, than in the others. 

§ 99. The study of the early history of land-tenures, begun 
since Mr. Ricardo's time, it is now admitted by English scholars, 
discredits his assumption that all the facts known to us can be 
traced back to the competition for the use of the soil. Such 
competition is quite modern in its origin. In former times land 
was not held by individuals, but by associated groups, bound 
together by kinship and by immemorial custom. The whole 
group held the soil in common as an inalienable possession, and 
assigned parts of it to single families for their use. While cus- 
tom defined the rights of these families and prevented all intru- 
sion upon them, custom also debarred the family from disposing 
of those rights. Where some chief or lord of the manor pos- 
sessed a claim upon the services of the rest of its inhabitants, the ; 
kind and amount of this also were fixed by custom ; and where 
a violent change of lordship overthrew existing customs, others' 
of equal rigidity quickly grew up in their stead, and were 
quietly assumed to have held from time immemorial. Noi 
market for land, and consequently no competition for its pos- 
session existed among the actual cultivators. Only the ex- 



RICARDO'S ANACHRONISM. 99 

tiuction of these tenures in common, and the enclosure of the 
lands, created individual ownership in the modern sense, and 
with it competitive rents. Down to quite recent times the rent 
of land even in England was fixed by custom, not by competi- 
tion, and much of it is still so held. But English economists, 
following Adam Smith and Ricardo, have always assumed that 
competitive are the only true rents, just as English lawyers 
have assumed that all customary rights are usurpations on the 
rights of the lord of the manor. Both opinions had their 
excuse in the almost if not quite universal ignorance of the 
historical fact; both have done great mischief to the common 
people, by fostering the notion that the traditional customary 
rights of the people to the land could be set aside without 
injustice. 

"These tenures aflFord confirmation of the doubts suggested in Sir 
Henry Maine's Village Communitiea respecting the historical truth of the 
economic theory of the origin of rent. Early land-rents were not com- 
petitive rents ; they were not at all in conformity with Mr. Ricardo's 
doctrine ; they bore, for the most part, no relation to the fertility of the 
soil, or its vicinity to market, if there was any market at all. . . . Each 
manor was, as it were, a separate territory, inhabits by a distinct com- 
• munity. There was no competition for the tenure of farms from without ; 
and within the manor the sole regulators of rent were the arbitrary will 
of the lord, and custom. The rent of the villein was at first, in theory at 
least, an arbitrary rent; in its next stage it was a customary rent, in 
labor or produce ; in a third stage it became commuted into a money- 
rent, based on a valuation of the customary service or payments in kind. 
In the book before us [Blount's Tenures of Land] we have many exam- 
ples of the customary rent in labor and in kind, and of the commuted 
money-rent ; but there is not a single example of a competitive rent. 
Competitive rents only began with enclosures and the disruption of the 
old manorial community ; and customary rents survive to this day in 
many a manor, in defiance of economic theory" ( T/ie Athenseum, 1874). 

The only early instance of a rent not fixed by custom is that provided 
for in one of the old Irish laws, in which a member of one group, be- 
coming an outcast, becomes the tenant of another. Of such a tenant as 
large a rent as could be exacted, might be justly demanded ; but of a 
member of the sept itself only a fair (i. e., a customary) rent could be 
exacted. 

§ 100. Mr. Ricardo is wrong in his very first premise. " The 



100 ELEMENTS OF POLITICAL ECONOMY. 

elements of value to" the first settlers of a new country ' are 
not the resources that are capable of development through in- 
dustry and enterprise, but those which offer the readiest supply 
of the necessaries of life'' (J. H. Burton). They do not begin 
with the best soil, and afterwards proceed to that which is worse, 
however natural and reasonable it may seem to assume that they 
do so. The best soil is usually not known to them as such ; 
even if it were, it is nearly always inaccessible to them. Through 
its very wealth, it is not unusually covered with timber, whose 
clearance is impossible to them. More commonly it is marshy, 
and requires what would be to them a vast expenditure of labor 
to drain it. It lies in the lower parts of the country, to which 
the aqueous circulation has been for ages carrying down the 
richest elements of the soil. It is infested with malarias, bred 
of vegetable decay. It is utterly devoid of those natural facili- 
ties for defence, which in most situations are imperiously neces- 
sary to the settler. 

The progress of civilization in all ages, therefore, has been 
from the thin and poor soils high up the rivers to the richer 
soils that lie neai^r their mouths. . The retrogression of civiliza- 
tion has been the abandonment of the richer soils and the re- 
treat up the hillsides to those that are lighter and less fertile. 

The next chapter gives the historical proofs of these facts, and of the 
true law of settlement. 

The great means that has enabled men to pass from the poorer 
soils to the richer is the power of co'dperation that increases with 
the growth of numbers, unless some artificial obstacle has been 
interposed to prevent it. The sudden decline of numbers, or the 
diminution of the power of association, has had the effect of 
driving men back from the land that richly repays the labor 
expended upon it, to the soil that furnishes natural drainage, 
that can be ploughed with a crooked sapling. and harrowed with a 
thorny bush. The labor expended upon such soil is slightly 
repaid; the crop reaped is therefore dear; but necessity has no 
choice. 



CHAPTER SIXTH. 

The National Economy or Land {^continued) : How the 
Earth was Occupied. 

§ 101. The historical refutation of Mr. Ricardo's theory, 
which is presented by the history of the settlement of the various 
countries of the earth, was first given to the world by Mr. H. C. 
Carey in his book The Past, the Present and the Future (1848). 
It is worthy of study, not only as a refutation of a dismal theory 
of the destiny of mankind, but for the light it casts upon the 
economic side of the world's history, and indirectly upon other 
ijides also. It might be easily and fairly elaborated into an 
economical history of the earth, for that history is nothing but 
the story of man's victory over nature's resistance and the pro- 
gressive mastery of her manifold utilities. 

§ 102. The theory that we are discussing was devised to ex- 
plain the condition of Great Britain, but no English antiqua- 
rian would have given such an account of the settlement of the 
country. When the Romans invaded England, it was at most 
about half as populous as at the date of the Norman conquest. 
"The woods must have been larger, the fens had not been par- 
tially reclaimed and made accessible by causeways ; some of the 
tribes were unacquainted with tillage; the beech tree, which 
doubled our food for swine, had not been introduced ; half the 
roots, vegetables and fruits, which now supplement our corn- 
crops, had not passed the Channel, and the great roads were not 
yet made on which the plenty of a fortunate district could be 
transported to parts where the crops had failed. The stunted 
British cattle, whose remains we constantly disinter, are proof 
that even if tillage was known, a large portion of the population 
lived upon milk. The best peopled parts of England were pro- 
bably those which were most open and easy to cultivate ; the 
home counties, Norfolk and Suffolk, and the south-western coun- 
ties." A " mighty sum of toil has transformed the countrjif 

101 



102 ELEMENTS OF POLITICAL ECONOMY. 

throughout England. The fens and forests are a mere memory 
and a name; foreign trees grow in our hedge-rows; it is difficult 
to find a point within half a mile of which a road does not run ; 
the climate has been modified as woods have been felled and 
marshes drained ; our rivers are smaller than in the old da3's. 
Thanks to these labors, and to those marvellous changes in agri- 
cultural science, which may bear comparison with any triumphs 
of mechanics, England, left to her own resources, can now 
support four times the population that the country contained 
under Edward III., eight times our -cumber at the period of the 
Norman conquest, and perhaps sixteen men for one whom Caesar 
found in the island." 

In this and the following paragraphs quotations not otherwise credited, 
and much besides, are from Mr. C. H. Pearson's Historical Maps of 
England, with Explanatory Essays (2d edition, London. 1870). Mr. 
Pearson tries to account for many of the facts by military and politica* 
reasons, having no knowledge of the true law of the occupation of the 
land. 

§103. The Celtic tribes whom the Romans found in the 
island do not seem to have been either numerous or powerful, as 
the invading army that added the island to the Roman Empire 
numbered but 30,000 men. The home of the several tribes is 
in every case but one uncertain, but they seem to have been con- 
fined to the hills of the north and to the hill system of the south 
and west coasts, which opposes its clifi*s to the currents from the 
Atlantic, and is divided from the rest of the island by the old 
Roman military road from London through Chester, which the 
Saxons called Watling Street. 

The monumental remains of the ante-Roman epoch indicate] 
this. " The earliest grave mounds are mostly found in the' 
mountainous districts of the land, — among the hills and fast- 
nesses ; the later [Roman and Saxon] overspreading hill, valley 
and plain alike. Thus in Cornwall, in Yorkshire, in Derbyshire 
and in Dorsetshire, in Wiltshire and many other districts, the 
earliest interments are or have been abundant ; while the later 
ones, besides being mixed up with them in the districts named, 



CELTIC OCCUPATION OF ENGLAND. 103 

are spread over every other county. In the counties just 
named Celtic remains more abound than those of any other 
period. In Dorsetshire, for instance, Hhat county/ as the 
venerable Stukeley declares, 'for sight of barrows not to be 
equalled in the whole world,' the early mounds abound on the 
downs and the lofty Ridgeway, an immense range of hills of 
some forty miles in extent, — while those of a later period lie in 
other parts of the county. In Yorkshire again they abound 
chiefly in the wolds ; and in Cornwall on the highlands. The 
same again of Derbyshire, where they lie for the most part 
scattered over the wild mountainous region of the Peak, — a 
district occupying nearly one-half of the county, and containing 
within its limits many towns, villages and other places of 
extreme interest. In this it resembles Dorsetshire, for in the 
district occupied by the Ridgeway and the downs are very many 
highly interesting and important places. It is true that here 
and there in Derbyshire, as in other counties, an early grave 
mound exists in the southern or lowland portion of the county. 
. . . There are districts where there is scarcely a hill even in 
that land [of hills] where a barrow does not exist or is not 
known to have existed." 

See Grave Mounds and their Contents, by Llellwyn Jewett. London, 
1870. 

§ 104. West of Watling Street lay (1) the ancient kingdom 
of Cornwall^ which must have been densely peopled, as we learn 
from the Roman lists of towns, the traces of ancient agriculture 
and the abundance of ancient remains. Here is the seat of 
the events now clothed in poetry in the Arthur-Sagas. The land 
is now mostly abandoned by the farmer to the fisherman and the 
miner. (2) Wales, whose mountains were fought for as a prize 
by the two great branches of the Celtic race. (3) The Welsh 
kingdom of Strathclyde, which includes the Galwegian district 
of Scotland and the lake district of England. When the 
Roman occupation ceased, we find the Celts confined to this dis- 
trict and the south coast. Their literature " shows no acquaint- 
ance with the country east — let us say — of the second degree of 



104 ELEMENTS OF POLITICAL ECONOMY. 

longitude, beyond what a half-educated yeoman now might have 
of America. . . . Except perhaps in one case there is no 
authentic tradition of war with the Saxons or Angles in that 
region, or of British sovereignty there. The single exception is 
that of Kent." And yet the race is remarkably tenacious of 
traditions. It carried the Cornish Arthur-Sagas into Brittany; 
the Irish Fingal-Sagas into Scotland. It knew little or nothing 
of the east, of the rich lands containing nearly all the wheat- 
fields of England, while the west is devoted to grazing. What 
tribes were found there by the Bomans were few and scattered. 
It was therefore open to Boman colonization, and a mixed multi- 
tude of Boman citizens and continental peoples was transplanted 
thither. Seventy thousand Boman citizens are said to have 
been killed in the massacres by which Boadicea began her revolt. 
This was the region that fell so easily into the hands of the 
Grerman tribes, and after a few struggles became the site of 
Saxon kingdoms. As the Saxons pressed westward they en- 
countered a fiercer resistance, and repaid it by enslaving the 
conquered people. At Domesday the percentage of slaves in 
the north and east was but 3 J per cent. ; in the five south- 
western counties 16 to 17 per cent. ; and the intermediate 
degrees of serfage hold the same proportion. The west was the 
land desired by Saxon as well as Celt ; its ranges of hills, that 
rise to mountains as they approach the sea, were the subject of 
protracted conflict, and it was the kingdom of Wessex that rose 
to such eminence that its king became Bretwalda or sovereign 
of England. " All the energy and enterprise of the Saxon 
name flowed naturally towards the west, and from the district of 
the West Saxons, at first only embracing Hampshire and a part 
of Wiltshire, went out all the conquering expeditions that 
wrested not only the south-west and the valley of the Severn, 
but the more southern of the Midland counties from the 
Britons.*^ 

§ 105, The early isolation of the Saxon kingdoms as of the 
Celtic tribes was largely due to the great lines of forest that ran 
across the country, and to the fens that covered much of its 



THE SAXONS IN ENGLAND. 105 

surface. To the former (as greatly increasing the annual rain- 
fall) the existence of the latter was largely due. " The clouds 
which at present pass over our heads and break in another 
country or over the sea, were arrested by the simplest natural 
agencies; and the water that now flows down in a thousand 
drains to the river, was preserved in marshes and lakes, which 
in turn sent back what they had received in dank exhalations." 
The deflections of the Roman roads show that these were among 
their chief diflScultics of engineering, while they show readiness 
to run over a hill instead of round it. In Saxon times these 
obstacles isolated closely related tribes, and forced them to 
advance from east to west, and to occupy the poorer soils on the 
high moorlands and the mountain-sides, where traces of the 
most ancient occupants are visible. We find the Saxon Saint 
Outhbert praised because in his missionary tours " he was wont 
chiefly to go through those places and to preach in those ham- 
lets which were high up on rugged mountains, frightful to others 
to visit, and whose people by their poverty and ignorance hin- 
dered the approach of teachers. He went out from the monas- 
tery often a whole week, sometimes two or three, and often also 
for a whole month would not return home, but abode in the wild 
places " and gave them lessons in husbandry and in finding and 
saving water (Hughes's Alfred the Greats pp. 28-9). 

§106. Throughout early English history the lands beyond 
the Humber are slightly or not at all connected with the southern 
shires. Of the midland shires, now the most fertile grain-lands in 
the island, we hear next to nothing. " The map of Saxon-Eng- 
land is singularly bare for that midland district, and the few 
names that mark it are mostly of towns which Edward the Elder 
founded as a military frontier. Few, indeed, are* the charters 
that record gifts of land in its rich pastures ; scanty and late 
the names of monastic foundations that sprang up in it." 
" A great district popularly called the desert stretched from 
Durham through the West Riding [of Yorkshire] to the Peak 
[in Derbyshire ;] and to a period as late as the twelfth century, 
contained no town of importance. . . The site of Durham was 



106 ELEMENTS OF POLITICAL ECONOMY. 

occupied by a thick wood in the twelfth century. Down to a 
much later time, a lamp used to be hung from the old steeple of 
All Saints, York, to guide travellers across the forest of Galtres. 
The Domesday Survey tells us that in Derbyshire five ' hundreds ' 
out of six were heavily wooded ; and that in Lancashire a quar- 
ter of a million of acres was covered with a network of aense 
woods." With the Normans begins a new era for these mid- 
land shires. " Generally the north of England, Kent and Glou- 
cestershire, were the parts most thickly peopled under the 
Romans, while under the Saxons Wessex and the eastern coun- 
ties were on the whole the best governed and developed. . . 
From Derby, with its one borough, to Wiltshire, with at least 
eight and perhaps sixteen, or Suffolk with six, is a great ascent. 
But it points to different conditions of country " " With the 
Norman dynasty came new conditions of national life. Wiltshire 
and Somersetshire declined in relative importance. . . Under 
King John Lincolnshire alone contributed a fourth of the 
exports between Newcastle and the Land's End. The mid- 
land districts of England were now neither desolate nor mar- 
tial." Yet we still find districts now fertile named in mediaeval 
history as morasses which threatened the destruction of armies ; 
and the rich grain-fields of South Lancashire were in the reign 
of Elizabeth a quagmire that daunted the antiquary Camden. 
Oliver Cromwell was one of a " company of adventurers" who 
undertook to drain the fen of Huntingdon and Cambridge shires 
by diking the channel of the Ouse. 

Northumberland during the Eoman period was densely set- 
tled ; Roman remains are numerous ; Roman cities were fre- 
quent and of great size on its " naturally sterile " soil. It 
afterwards sank into comparative unimportance. The eastern 
lowlands of Scotland were at first an outlying part of this king- 
dom ; the castle of Edinburgh is built on the site of a North- 
umbrian fortress designed to defend the northern frontier. 

§ 107. The earliest history of the kingdom of Scotland goes 
back to the occupation of the Western Highlands by Scotch 
tribes from the north of Ireland and their subjugation of the 



SCOTLAND AND ITS ISLANDS. 107 

Picts. But the prehistoric remains, such as the subterranean 
dwellings and villages on the upper reaches of the river Don in 
the slopes of the Highlands, go still farther back. " The coun- 
try is crowded with hill-forts, small and great; they may be 
counted by hundreds. They consist of mounds of earth or 
stones, or both, running round the crests of hills.'' Every spur 
of the Cheviots is crowned with remnants of old ftistnesses whose 
builders are unknown to us. 

As to the Irish occupation of the Highlands it has well been 
gaid that " one acquainted with the agricultural resources of the 
north of Ireland at the present day, might question the induce- 
ment of a people to leave that region for the sake of settling in 
Western Scotland. But it is observable of the Celts as of other 
indolent races, that the elements of value to them arc not the 
resources capable of development through industry and enter- 
prise, but those which offer the readiest supply of some of the 
necessaries of life. . . The geological character of the country 
would supply them with a limited quantity of alluvial soil for 
immediate cultivation. It was found on the deltas of the moun- 
tain streams, on the narrow straths around their margin, and 
occasionally in hollows containing alluvial deposits, whith might 
have been the beds of ancient lakes. These patches of fruitful 
ground the first immigrants would find ready for use. Modern 
agriculture has indeed been able to add very little to their area, 
and has wisely determined that sheep-farming is the proper use 
of those tracts of mountains among which the alluvial patches 
are thinly scattered. It is a curious coincidence worth remem- 
bering, that those very lands in Northern Ireland which the. an- 
cestors of the Scots Highlanders abandoned,, were in later times 
sought and occupied by Scots Lowlanders as a promising field 
of industrial enterprise." 

See Burton's History of Scotland, Chapter V. (Edinburgh, 1873). 

As in English history, we find a Celtic kingdom (Strathclyde) 
occupying the western hills and Cumberland, while the more 
fertile Lothians lie open to the invader and yield to the Teutons 



108 ELEMENTS OF POLITICAL ECONOMY. 

■with hardly a struggle. But even in the Lothians the richer soils 
— as along the Tweed — are of more recent occupation and were 
forests and swamps two centuries ago. 

§ 108. The comparatively bare and now insignificant islands 
that lie around the coast were once prizes. The Romans seized 
the Orkneys and perhaps established a garrison there, and the 
remains of cyclopean works attest a still earlier occupation of 
the Islands. In the Ossianic traditions they formed a powerful 
kingdom. In the middle ages they were pledged to the King 
of Norway as security for a sum of money that would now 
more than purchase their fee simple. To the west lie the far 
moie barren Hebrides, which, with the Isle of Man, Dublin and 
the south-east of Ireland, once formed a powerful Danish king- 
dom. These islands, once " rich and powerful," we find after- 
wards " sinking into -poverty," while the others have merely 
*' preserved a respected position in the British Empire, as main- 
taining a valuable and industrious population." 

The Duke of Argyle, President of the Cobden Club, in his 
book about lona tells us the story of the settlement of that 
island and the adjacent highlands. " At a time," he says, 
''when artificial drainage' was unknown, and in a rainy climate, 
the flats and hollows, which are now generally the most valuable 
portions of the land, were occupied by swamps and moss. On 
the steep slopes alone, which offered natural drainage, was it 
possible to raise cereal crops. And this is one source of the 
error which strangers so often make in writing on the High- 
lands. They see the marks of the plough high up upon the 
mountains, where the land is now very wisely abandoned to the 
pasturage of sheep or cattle j and seeing this, they conclude 
that tillage has decreased, and they wail over the diminished 
industry of man. But when those high banks and braes were 
cultivated, the richer levels below were the haunts of the otter 
and the fishing-places of the heron. Those ancient plough- 
marks are the sure indications of a rude and ignorant hus- 
bandry. 

" In the eastern slopes of lona, Columba and his companions 



IRELAND AND NEW ENGLAND. 109 

found one tract of land which was as admirably fitted for the 
growth of corn, as the remainder of it was suited to the support 
of flocks and herds. On the north-eastern side of the island, 
between the rockj pasturage and the shore, there is a long 
natural declivity of arable soil, steep enough to be naturally 
dry, and protected by the hill from the western blast. 

" And so here Columba's tent was pitched and his Bible 
opened, and his banner raised for the conversion of the 
heathen." 

§109. Ireland (as that best of judges Arthur Young says), 
taken acre for acre, is more fertile than England. Yet in her 
earlier history, when the whole population consisted of a few 
hundred thousands gathered into clans, its " pressure upon land 
and food" caused frequent famines, and led to large emigrations 
into what we regard as the poorest parts of the sister island. 
Such was the exodus of Scots that established the Celtic king- 
dom of Dalaradia, and laid the foundation of Scottish nation- 
ality. Such also was the invasion and occupation of North 
Wales by the Gadhelic or Irish kingdom of Gwynned, just 
about the time of the Saxon incursions on the east. 

The Scotch and English colonies in the north had a long 
struggle with the natural obstacles to settlement, among which 
want of drainage and consequently malaria and agues were the 
chief. Within the memory of people now living, large districts 
have been brought under culture, and the yield of the land im- 
mensely increased wherever the density of population was such 
as to make it both possible and profitable. The malarious 
type of disease — including that offspring of the union of hunger 
and malaria, typhus fever — have comparatively disappeared. 

§ 110. In America, the Pilgrim Fathers and the Puritan 
colonists fixed their homes on the barren shores of Massachu- 
setts Bay ; and even when they penetrated the country to found 
. new commonwealths, they chose high and dry spots like New- 
port and New Haven. The richest soils under cultivation in New 
England were reclaimed within fifty years. Other lands, quite 
as rich, if not richer, lie untilled, while old mountain settlements 



110 ELEMENTS OF POLITICAL ECONOMY. 

in Berkshire county and other districts are being emptied of 
their inhabitants and ancient farmhouses left untenanted. But 
much of the long-occupied lands have grown in fertility, as agri- 
cultural methods and appliances have been improved. "Our 
soil/' says Emerson, "is capable of as great and increased pro- 
ductiveness as that which England has attained. Concord is 
now one of the oldest towns in the country, — far on now [1858] 
in its third century. The selectmen have once in five years per- 
ambulated its bounds, and yet in this year a very large quantity 
of land has been discovered and added to the agricultural land, 
and without a murmur of complaint from any neighbor. By 
drainage we have gone to the subsoil, and we have a Concord 
under Concord, a Middlesex under Middlesex, and a basement- 
story of Massachusetts more valuable than the superstructure. 
Tiles are political economists. They are so many young Ameri- 
cans announcing a better era and a day of fat things." 

Mr. Emerson sees the bearing of all this, for he adds: "There has 
been a nightmare brought up in England, under the indigestion of the late 
suppers of overgrown landlords and loomlords, that men bred too fast for 
the powers of the soil, — that men multiplied in a geometrical ratio, whilst 
corn only in an arithmetical. The theory is that the best land is taken 
up first. This is not so, as Henry Carey of Philadelphia has shown, for 
the poorest land is the first cultivated, and the last lands are the best 
lands. It needs science to cultivate the best lands in the best manner. 
_ Every day a new plant, a new food is found. Thus political economy is 
not mean, but liberal, and on the pattern of the sun and sky ; it is coin- 
cident with love and hope. It is true that population increases in the 
ratio of morality, and the crops will increase in like ratio." 

§ 111. lu New York the first lines of settlement ran along 
the dry and sandy hills from Manhattan Island and the High- 
lands to the Mohawk valley. The settlements on the edge of 
that beautiful and fertile region are much older than those within 
it. Rich and fertile districts like Greneva have not a history of 
more than seventy years, while the more remote and less fertile 
lands along the Pennsylvania line were settled very early, their 
elevation and their consequent exemption from malaria being an 
especial recommendation. The New York farmer of our days 
finds that " knocking the bottom out of a swamp " is one of the 



f 



MIDDLE AND WESTERN STATES. Ill 

most profitable things he can put his hand to, and his less-know- 
ing neighbors stare at the crops that follow. 

New Jersey was preferred by the first Quaker settlers to the 
west bank of the Delaware, because of the abundance of her 
light, sandy soils, which were the more easily got at. Hundreds 
of their clearings, which have long been abandoned, may be 
found in these districts. The Swedes across the river followed 
suit. They built Christina, Lewistown, and other towns of 
Delaware that have become decayed and insignificant places. 

§ 112. Penn had the same preference for high land. His 
first choice for the site of Philadelphia was twelve miles farther 
north. The early maps of the province show us miles of small 
farms running from the city along the tops of the ridges, while 
the richer and lower lands on each side are marked as uncleared 
and uncultivated. Hence the origin of the Ridge Road. A large 
part of the banks of our rivers above the city, are still unsafe as 
building-sites, while below us lie undrained swamps that will yet 
be the farm-gardens of our city. Much of the best land in the 
interior of the state is still unoccupied, especially in the valley 
of the Susquehanna, while comparatively barren places on the 
slopes of the Alleghenies and its related ranges were settled at 
a very early date. The old roads of the state go twisting about 
as if in search of hills to clamber along — even in the limestone 
valleys, where there is no malaria — while the new ones run 
along the streams and through the valleys. 

The vast immigration from the north of Ireland that went on 
during last century found homes in the Alleghenies and their 
spurs, which they entered through Pennsylvania and North Caro- 
lina, and then spread over the whole Apalachian system from 
what are now the Oil Regions to Huntsville in Northern Ala- 
bama. Their choice was not prompted by want of better lands, — 
for such lay unreclaimed on both sides of the mountains; — nor 
by indolence (as Mr. Burton charges upon the Irish settlers of 
the Scotch Highlands), for no race is more industrious ; — nor by 
any special safety of their position, as they had to bear for half 
a century the brunt of our Indian wars. They took the lands 



112 ELEMENTS OF POLITICAL ECONOMY. 

that lay most open to them, as did their brethren, who passed 
by Maine to settle the Granite State. 

§ 113. The same course of settlement may be traced in every 
Western state. Everywhere the rich valley-lands are avoided 
as the seat of malaria. In Wisconsin the first settlement was 
made in the patch of highlands called the Blue Mound, and the 
lines of settlement ran out along the sandy hills as in the east. 
The richest and the most fertile spots .on the prairies were in 
earlier times the sloughs or " wet prairies " — the terror of travel- 
lers, but now under combined and patient exertion " fair as the 
garden of the Lord.'' One such in Southern Illinois, occupied 
by Paisley weavers turned American farmers, recalls the most 
carefully tilled bits of the British Islands. This whole district, 
commonly known as Egypt, and spreading from the Mississippi 
far east of the Wabash, is perhaps the richest in the whole 
North. Yet the Southern planters on their way to occupy Mis- 
souri, passed it by in disdain, and left it to " poor whites " of the 
South, who occupy such dry and sandy ridges as they find 
accessible, where the rudest agriculture suffices to supply their 
very primitive wants. The rich creek bottoms are inaccessible 
to its rude and scanty population, who^ have hardly any notion 
of their value and no capital sufficient to master them. A man, 
whoso lands if rightly tilled would feed a New England town, 
will live in a log-hut of two rooms, with a loom and spinning- 
wheel on the " stoop," and ride to a Hard Shell church, with a 
saddle of raw hide and stirrups of straw. Every family has its 
package of quinine, and " the Egyptian shakes " are a proverb. 

If we ascend the various branches of the Mississippi, we find 
tillage approaching the river if the population is dense, receding 
from the river to the barer lands that furnish natural drainage 
if it be sparse. 

Descending the river we reach the vast levees that protect the 
richest plantations of the continent and testify to the growth of 
man's power to command the services of nature with the in- 
crease of numbers. East of this southern valley lie the South 
Atlantic States. In North Carolina the richest lands are still 



SUMMARY VIEW. 113 

undrained, while labor is expended upon others that yield from 
three to five bushels of wheat to the acre. The Cotton States 
contain millions of acres still inaccessible to aoriculture throusrh 
lack of population, because a large outlay of intelligently di- 
rected labor would be required to occupy them. 

In Texas the first Spanish colony at Bexar and the first 
American colony at Austin, high up on the Colorado, were both 
settled by men, who passed by millions of acres of better land as 
inaccessible, to reach an exceptional elevation. 

§ 114. Looking at the entire area of the earth's surface, we 
fij)d (1) that no nation occupies a territory incapable of support- 
ing its actual or even its probable population. Norway comes 
nearest to forming an exception, but the Scandinavian peninsula 
is manifestly designed for the home of one nationality. Sweden 
raises more cereals than her people eat, and a very considerable 
area of her arable lands is still covered with dense forests. 
England is clearly no exception ; she is capable of producing 
on her soil four times as much food as her people use; but her 
agriculture lags far behind the general average of her skill in 
the invention of better methods and in the application of scien- 
tific principles. 

(2) The pressure of population upon subsistence and upon 
the land exists in sparsely-settled regions, and there only. It is 
a providential agency to stir men to greater exertions and wiser 
methods, and these exertions are always abundantly rewarded. 

(3) The richest areas of the earth's surface lie still unoccu- 
pied, and in many cases the richest districts, within national 
boundaries whose population is dense enough to take possession 
of them, are untilled and undrained. 

(4) The area of culture may be indefinitely extended in both 
directions. It is now — we may say — the belt of land that lies 
between districts that are too poor and districts that are too rich 
to repay culture. The former as well as the latter may be mas- 
tered, as the sciences advance in their mastery of the secrets of 
nature; chalk downs and sandy deserts may be transformed info 
fair garden fields and orchards at the touch of man, as great 

8 



114 ELEMENTS OF POLITICAL ECONOMY. 

natural forces and resources are brought into his service. The 
wilderness and the solitary place shall be glad, and the desert 
shall rejoice and blossom as the rose. 

(5) The value of the land of a country is chiefly — or in 
truth entirely — due to the labor that has been wisely expended 
upon it, and is proportional to that. The price of a Belgian farm, 
for instance, is twelve times as great as that of the same amount 
of waste land in the same country, and the latter brings even 
that nominal price only because (1) it furnishes a field for labor 
to produce utilities possible but as yet non-existent; (2) because 
the labor already expended on other adjacent pieces of land, 
and the growth of numbers and of the power of association, 
have made it possible to bring this one under tillage. Were the 
same piece of land to be transferred to the Andes, its market 
value would be nil. 

In fine, if in any case a people, with the strength of numbers 
and the strength of skill, should come to such a state that great 
wealth should be found side by side with deep poverty and its 
accompaniments, misery and sordid vice, the cause of such a 
state of things is not to be sought in " the pressure of popula- 
tion upon land and food," but in bad national thrift. Somebody 
is to blame ! 



CHAPTER SEVENTH. 
The National Economy of Labor. 

§ 115. The industrial age, in which national economy has 
become a science, is also the democratic age, in which the govern- 
ing class are no longer regarded as composing the state or possess- 
ing an exclusive right to direct its policy to the promotion of 
their own interests. It is no longer possible, therefore, to call a 
nation wealthy and prosperous because large masses of capital 
are in the hands of a few men, if the great body of the 
people are ill-fed, ill-housed and ill-clothed, or struggling on the 
brink of pauperism. The prosperity of ''the most numerous 
class, that is, the poorest," is coming ever more to the front as 
the great problem of modern statesmanship. 

In an industrial age this problem resolves itself into the 
question of the rewards of labor. Modern governments can no 
longer undertake to support great numbers of people in idleness 
on the produce of the industry of other classes, as was done in 
the Greek republics and the Roman Empire. Those others, 
with the advance of political equality, claim equal rights and 
care. The aim of national economy is therefore to secure " a 
fair day's wages for a fair day's work," to all who are willing 
and able to work. 

In modern industry, the operations are so complex in method 
and so extensive in scale that unassisted labor would be unable 
to undertake them. Those who by their savings, or by the 
inheritance of other men's savings, have come into the pos- 
session of a large amount of the results of past labor, natur- 
ally and necessarily take the work of organizing industry and 
directing its forces. These men are capitalists, and their ac- 
cumulations are called capital. 

§ 116. Of the net product of the joint application of labor 
and capital, what proportion should fall to labor and what to 

115 



116 ELEMENTS OF POLITICAL ECONOMY. 

capital ? Is there a natural and necessary rate of distribution 
or does it vary arbitrarily according to the contract made ? 

The English economists generally accept the former alterna- 
tive ; they believe that there is a natural and necessary rate of 
"wages ; that no efforts of the workman can permanently raise 
Wiiges above that rate, and no efforts of the capitalist can per- 
manently depress them below it. For, say they, if wages be 
raised above the natural rate, the rate of increase in the population 
will be accelerated, and after a time the number of workmen will 
be so great that they will underbid each other for work, and the 
rate will be depressed again. If it be depressed below the natural 
rate by this or any other cause, then the rate of increase of the 
population will be diminished, and the labor market will be 
scantily supplied, so that wages must rise. Between the two 
extremes of this oscillation, there is a middle point of stability, 
— the natural rate of wages, that which will neither accelerate the 
growth of population till it surpasses the growth of capital, nor, 
the reverse. This natural rate is the amount necessary to sup- 
ply to the unmarried workman the real necessaries of life, and 
whatever other things his class regard as such. 

The theory is commonly stated in another form, which also 
accepts a natural rate of wages, and one which is reached far 
more swiftly. All the money in a country that is available 
for the payment of labor is taken in the mass and called the 
wage fund. This fund is divided pretty equally among all the 
laborers in the country. The apparent inequalities in the dis- 
tribution are not real ; higher wages can always be traced to 
payment for undergoing danger or doing work that is disagree- 
able or discreditable, or work that involves special capacity or 
preparation. The amount of the fund to be divided depends 
upon the amount of capital in circulation. The rate of division 
depends upon the number of claimants. The workingmen have 
no power to increase the amount of the fund, but they can limit 
the number of those among whom it is divided, and on their 
doing so dep-ends their welfare as a class. 

This theory in both its shapes grows out of the supposed 



J 



THE HADES OF LABOR. 117 

*' law of population," and must stand or fall with that. Like 
that, its motive is to show that the misery of the working classes 
is not to be attributed to any mismanagement on the part of the 
ruling class, but to the operation of natural and unavoidable 
laws. Its verdict is, " Nobody to blame," when the growth of a 
nation in wealth and numbers, and the distribution of wealth 
among those numbers, do not go on together. 

The first form of the theory is fully refuted by the ascer- 
tained fact that the poorest classes are the most thriftless, 
and^the least likely to take thought for the future. The second, 
by the proofs that workingmen actually have, by combination, 
raised the rate of wages, without any such increase of circula- 
ting capital, or the resulting " wage fund," as is here demanded 
as a preliminary to that increase. 

The facts are abundantly given by Mr. "W. T. Thornton {On Labor, 
1870), and by Mr. Cliffe Leslie {Systems of Land Tenure, 1868). 

§ 117. If the English theory as to the relations of labor and 
capital be true, then there is no hope for the essential improve- 
ment of the workingman's condition so long as the existing order 
of society holds its ground. What labor gains on one side it 
for ever loses on the other, and as often as it rolls the Sisyphean 
rock — the rate of wages — up the hill, it rolls down again to 
crush and destroy the workman. All the old pictures of foiled 
effort, with which the Greeks peopled their Hades, become but 
pictures of the efforts of the working classes to raise their con- 
dition above the wretched standard called " natural wages." 

Those who are striving to rouse the working classes to over- 
throw the frame-work of modern society and its economic basis, 
the right of property, are not slow to discern this. Thus the 
leader of the German socialists, Lasalle, based his fierce denun- 
ciations of modern civilization and its proprietary rights upon 
the recognised doctrines of the English school, claiming to be 
"equipped with all the knowledge of the age" on this subject. 
His chief opponent, his successful rival in the love and allegiance 
of the working classes of Germany, is Schultze-Delitzsch, who 
has devoted his life to showing the working classes that they 



118 ELEMENTS OF POLITICAL ECONOMY. 

can improve their condition simply by removing unnatural 
obstacles to improvement, by availing themselves of the great 
drift of society towards an equality of condition, and without 
for an instant liftios: their hands against the accumulations and 
the vested rights of the rich. In doing so, he ranged himself 
on the side of the German-American school of economists 
founded by List and represented by H. C. Carey, telling Herr 
Lasalle that if he had taken the pains to go over the whole field 
he would have found better teachers and better principles than 
those of Malthus and Ricardo. • 

" If any one object," he says, "that the economical principles of the 
writer are devoid of authority, it will sufi&ce to answer that these princi- 
ples have been established by the work of one of the most philosophic 
minds of our epoch, the celebrated American economist, Carey. That 
work is entitled Principlea of Social Science. It was finished in 1860 ; 
some years later gave us a German translation of it (Miinchen, 1863-4, 
published by E. A. Fleischmann). We commend it to the public as one 
of the most eminent publications that have appeared in this branch of 
human knowledge. 

" All that is false and damnable in the economic theories of the modern 
English school, especially those of Ricardo and Malthus, — theories 
which furnish the starting-point for the thesis defended by Lasalle, — there 
meets with a triumphant refutation ; and it is truly astonishing that our 
opponent, * armed with all the knowledge of the age,* had not even known 
of the aforementioned labors of the eminent man, who, during the last 
twenty years, has discovered a great number of truths that are now ac- 
cepted as axioms in political economy." 

John Stuart Mill, in his Autobiographji, shows us that the gloomy out- 
look for the future of the majority of mankind, presented to his mind 
when he studied the world through the spectacles made for his eyes by 
Malthus and Ricardo, led him to at least approximate to the theory of 
the St. Simonian socialists. They proposed to abolish all rights of in- 
heritance ; to reconstruct the government out of the ablest men in each 
of the professions ; to make the state everybody's heir, and to redis- 
tribute all property as fast as its present possessors died. In Mr. 
Mill's Principles fii, xiii, ^ 2) he speaks of "the industrial system pre- 
vailing in this country and regarded by many writers as the ve plus ultra 
of civilization," as "irrevocably condemned," unless it prove itself com- 
petent to solve the population question by bringing suflScient motives to 
self-restraint to bear upon the classes " dependent on the wages of hired 
labor." 

§ 118. The English theory that the power of competition 



THE LAW OF PARSIMONY. 119 

fixed all the status of industries, and that all things found their 
level, led to the inference — adduced above — that the wages of 
labor are essentially the same in all departments, and that any 
difference in payment could be traced to an implied payment for 
facing some danger, or something disagreeable or disgraceful in 
the work. Closer investigation shows us that custom is as large 
an element as competition in determining the rate of wages, 
although the latter is gaining upon the former steadily in modern 
society. The great change going on all around us is from cus- 
tomary status, that fixes the rate and price of all things by 
tradition, to one in which they are fixed by free contract. But 
the change is anything but complete in any department of life, 
and as to wages it is simply impossible to say why some classes 
of work are paid so high and others so low. To give a reason 
for the difference would be to trace to reason what had not its 
origin in reason ; or if it ever had, it was in a past so distant 
that we cannot reconstruct it. 

§ 119. Capitalists are, of course, more ready than working- 
men to listen to the English arguments in favor of the necessity 
and naturalness of a low rate of wages. But the effort to keep 
the workingman down to such a rate ignores the very nature of 
the instrument that is to be used. It is to adopt as a maxioi of 
economy the fundamental falsehood of slavery, — that a man may 
be treated as a thing. The law of parsimony is a wise one in 
dealing with the material, but not with the workman. Every 
needless pound of iron on the locomotive, every needless pound 
of coal in the fire-place, is so much waste of the moving force. 
Every unnecessary ton of iron on the girders of the bridge 
merely adds to the weight to be sustained, without proportionally 
increasing the strength that sustains it. So in regard to cost of 
material ] what is needless is waste. 

But when we come to apply the law of parsimony to the com- 
plex being called man, we discover by experience that there are 
very decided limits to its application. Here at least '^ there is 
that scattereth and yet increaseth, and there is that withholdeth 
more than is meet, and it tendeth to poverty." The lowest 



120 ELEMENTS OF POLITICAL ECONOMY, 

wages that you can get a man to live on, will not get the best 
work out of him. Put a whole people on such wages, and keep 
them there — if you can — ^for two or three generations, and you 
will have crushed the energy, the spirit, the heart out of that 
people, and made them a very inferior and unprofitable class of 
workmen. You will have taken away from the great mass of 
them the means of advancing in intelligence ', their physical 
character will have deteriorated greatly ', their social morality — 
their good-will, and public spirit, and ready helpfulness, and 
brotherly feeling — will have been pretty thoroughly eliminated. 
Factories will be full of the inflammable human stuff, to which 
demagogues furnish the spark. The stability of the social edifice, 
and consequently the security of property, will be endangered. 
Instead of cheerful, pains-taking, thrifty work, eye-service alone 
will be rendered, and profits will suffer from waste more than 
they would from high wages. 

On the other hand, wages that put heart and hope into a man, 
that make him feel that his personal efforts and his best work 
are needed to keep them at present rates, that offer him the 
prospect of becoming his own master by frugality, that enable 
him to educate his children to fill a place like his own intelli- 
gently, or perhaps to rise to a higher place, — such wages are in 
the long run the best of investments. It cannot be said that caj)- 
italists any more than workmen, have always been alive to this 
substantial harmony of their interests. When the higher rate 
of wages has been adopted, it has too commonly been after a 
conflict between the two classes, through which much of its 
good effect upon the workmen has been destroyed. 

§ 120. Men are morally responsible for the terms on which 
they purchase labor. When the workman makes his contract 
singly, the capitalist has a power to dictate its terms, which 
does not exist in ordinary transactions. In case of disagreement 
as to terms, it remains to be seen which of the two can hold 
out longest. Labor cannot : the laborer would starve. Capital 
can live on its accumulations. If I refuse to buy the baker's 
loaf, because I think it too dear, he loses but little in waiting 



THE WASTE OF SLAVERY. 121 

till noon for another customer. I have therefore no means of 
dictating to him. But " labor is the most perishable of com- 
modities/' He who cannot sell his morning's labor before noon, 
can never sell it; it is gone. The producer of other commo- 
dities can at least stop producing, and lose only the interest on 
his capital, when the prices are unsatisfactory. But he who has 
labor to sell cannot stop producing, cannot cease to offer his 
single commodity for such price as he can get. 

§ 12L The history of labor shows the wisdom of generous 
dealing with the laborer. In the earliest ages, he was generally 
a slave ; but it was found that slave labor was dear at any price. 
Homer says : — 

" The day 
That makes a man a slave, takes half his worth away." 

Pliny tells us Coli rura ah ergastulis pessimum est, et quicquid 
agitur a desperantibus (It is the worst possible tillage that is 
carried on by slaves, nor are they more fit for any other sort of 
work, because they are devoid of hope). A southern slave- 
holder told Frederick Law Olmstead : " In working niggers we 
must always calculate that they will not labor at all except to 
avoid punishment, and they will never do more than just enough 
to save themselves from being punished, and no amount of pun- 
ishment will prevent their working carelessly and indifferently." 
Why should it ? " Fear," says Bentham, " leads the laborer to 
hide his powers, rather than to show them ; to remain below, 
rather than to surpass himself. ... By displaying superior ca- 
pacity, the slave would only raise the measure of his ordinary 
duties ; by a work of supererogation he would only prepare 
punishment for himself. His ambition is the reverse of that 
of the freeman ; he seeks to descend in the scale of industry, 
rather than to ascend." And just the same must be the effects 
of a system ir which the workman's wages are fixed by his 
necessities and not by his work. 

See Prof. Cairnes's The Slave Power (1862) ; Chapter II. " The Eco- 
nomic Basis of Slavery." 



122 ELEMENTS OF POLITICAL ECONOMY. 

§ 122. The history of European serfdom in the middle ages 
tells the same story. The great mass of the population of 
Europe was in a state of villeinage, which varied in its forms, 
but was commonly little short of slavery. They were worth so 
little as workmen that it took all but a small percentage of the 
population to raise food for the whole, and vast numbers were 
employed in herding swine and cattle. In the worst cases, which 
were very numerous, the villein had no right to the produce of 
his labor ; the landlord took the whole, and gave the serf what 
be pleased, — generally the refuse. Hence, as Grurth the swine- 
herd (in Ivanhoe) says, the cattle bore Saxon names (ox, pig, 
calf, sheep), while they lived and needed care, but Norman 
names (beef, pork, veal, mutton), when killed and turned to 
food. 

Afterwards these villeins began in great numbers to buy their 
time, and then their freedom, — a fact which shows at once the 
greater worth of free labor. Those feudal masters were too 
poor to give anything for nothing ) they sold their slaves to the 
slaves themselves, because the latter could afford to pay more 
than any other purchasers j and because the purchase-money 
earned in half freedom was the full price of the slave's work. 
What we see in our own century in Prussia went on in England : 
the emancipated serfs bought land of their lords, creating a new 
market for it. The Prussian masters complained of the Stein 
legislation (§ 90) as an invasion of vested rights, but that great 
statesman told them that a generous policy would benefit all 
parties. They now admit the fact; what their serfs gained they 
did not lose. Between 1829 and 1843 land rose 75 per cent, in 
Westphalia, while there has been an incalculable improvement 
in the condition of the peasantry — some of whom still remember 
the time when they were called sclaven. 

§ 123, We begin to hear of free laborers in England in the 
fourteenth century, and from this time laws are passed on the 
one hand to protect them and increase their number, on the 
other to keep their wages down to a minimum rate. These 
laws tell us themselves that such short-sighted policy could not 



THE HISTORY OF LABOR. 123 

reach its end. *' The price of labor continually rose ; the price 
of food constantly fell " (Thorold Rogers). This must have 
been the consequence of a great increase in productive power of 
labor acting in harmony with capital. The logic of facts drove 
wages up, and every successive change was to the advantage of 
all classes. The workman rose in freedom, self-respect and effi- 
ciency. 

Between the Restoration and the Revolution the week's wages 
of a farm hand was four shillings. In 1680 an M. P. com- 
plained that the English mechanic was demanding a shilling a 
day, though he would still work for less. In the century end- 
ing 1830, the wages of a carpenter at Greenwich Hospital rose 
from 2s. Qd. to 5s. Sd. a day. Bread, indeed, had risen equally, 
but all other necessaries had fallen. The weekly wages of a farm 
hand for various periods, if translated into wheat values at 
current rates, gives this result: 1680-1700,54 pints; 1701- 
1726, 64 pints; 1727-51, 78 pints; 1752-64, 80 pints; 1770, 
79 pints ; 1780, 82 pints ; 1824, 89 pints ; 1832, 90 pints. 

§ 124. In France this matter has been very carefully investi- 
gated, and it appears that the rural population of France had 
half as much food as they needed in the time of Louis XIV. ; 
two-thirds under Louis XV. ; three-fourths under Louis XVI. ; 
while from the time of the Empire the laborer's budget begins 
to show a surplus instead of a deficit. D'Argenson writes in 
1739 : '* At the moment when I write, in the month of Febru- 
ary, in the midst of peace, — with appearances promising a 
harvest, if not abundant, at least passable, — men die around us 
like flies and are reduced by poverty to eat grass." A fern loaf 
was brought to the council table by the King's brother that his 
majesty might " see what his subjects lived upon.'' With the 
increase of wages, labor has risen to such efficiency that one 
fourth of the soil formerly devoted to grain is now set free for 
" industrial crops," and the food of a much larger population is 
raised upon the other three-fourths. At the same time a much 
larger proportion of the people is set free to engage in manu- 
factures of all kinds. 



124 ELEMENTS OF POLITICAL ECONOMY. 

§ 125. In the colony of New York in 1773, when cheap and 
fertile lands were plenty, and every mechanic could turn farmer 
if he pleased, day laborers were paid 45 cents a day; ship 
carpenters, three times as much; house carpenters, $1.10; 
journeymen tailors, 56 cents. Adam Smith, who gives us 
these data, says that the London rate was lower than this, but 
that of the other colonies was not. Has the rate diminished 
since the country became more densely settled ? In 1850 our 
factories employed 731,137 men and 225,922 women, whose 
daily wages was respectively $.88 6-10 and $.49 2-10, for each 
person. In 1860 they employed 1,040,349 men and 270,900 
women, at wages of $1.02 and $.59 respectively. In 1870 the 
number was 1,615,598 men and 323,770 women, and 114,628 
young persons, a total of 2,053,996 workers, at an average of 
$1.18 per diem; a gain of 37 per cent, in ten years. 

§ 126. What is true of different periods in the same country 
is equally true of different countries at the same date : — 111 
paid labor is dearer as a rule than well paid. Two Englishmen 
will mow as much hay as six Russians, and although their wages 
are much higher, the hay costs the farmer only half as much. 
Arthur Young saw that the Essex laborer was cheaper at half 
a crown a day than the Tipperary laborer at 5 pence. This is 
still true of Irish labor outside Ulster and the Dublin Pale ; capi- 
talists pay less for it and yet find it at least no cheaper. The Ediri' 
hurgli Review denies that labor is cheaper on the Continent than 
in England in spite of the difference in wages, and Mr. J. S. Mill 
says " the cost of labor is frequently at its highest when wages 
are lowest.^' He says that labor is probably no dearer in the 
United States than in England. When the Revolution of 1848 
banished the English navvies who were working on the French 
railroads, it was found that twice as many Frenchmen could not 
do the work. But when these had been put for a while on the 
beef diet of the English navvies, they came up to the English 
standard, and two could do almost as much as five had done. 

§ 127. It is not only through the growth of the laborer in 
thrift and skill that his condition is bettered. All the accumula- 



THE LAW OF DISTRIBUTION. 125 

tions of capital in other men's hands coiiperate to make his 
work more eflScient and to secure him a larger share of its re- 
wards. All the work that has been done already adds to the 
value of the work that he is now doing. Hence, in the course 
of natural development, the power of labor over the accumula- 
tions of the results of past labor, grows with the growth of those 
accumulations. Past work never brings market price, because 
its very existence makes present work more effective than it 
was. "The share assigned to the laborer almost always bears a 
much larger proportion to his labor than his employer's share 
bears to the labor which his capital represents " (W. T. Thorn- 
ton). 

The price of a thing being fixed by the cost of its repro- 
duction, every improvement in the methods of production lowers 
the price of what has been already produced. Suppose that any 
European kingdom or American state were brought into the 
market as a whole, it would sell for the sum needed to bring it 
up to its present state of improvement in the present condition of 
labor. Such a sum would represent a mere fraction of the labor 
that actually was required in its past history to do the same 
work. Thus the worth of the fee simple of the real estate of 
England (including roads and mines) is reckoned — or was a few 
years ago — at £2,000,000,000. This represents much less than 
the labor of five million men for ten years at present English 
rates; yet it would purchase the results of the labor of millions 
spread over the thousand years through which the English 
nation has lasted (§ 102), because it would now achieve as much 
as those millions did. Value is not determined, therefore, by 
the cost of production, but by the cost of reproduction, and 
with every improvement in method, and even with every ac- 
cumulation of results, the latter falls below the former. 

With the growth in the productive power of labor, an in- 
creased proportion of the increased product falls to the laborer. 
The improved instruments with which he works are themselves 
the products of more efl5cient labor ; their value has fallen while 
»is has risen. The capitalist cannot demand as much for the 



126 ELEMENTS OF POLITICAL ECONOMY. 

use of them as before ; the workman's ability to become himselt 
a capitalist has increased, and that ability is one of the points 
to be considered in their contract. The capitalist's share in- 
creases greatly in quantity, but is a less proportion of the whole 
amount. For with the diminution of nature's resistance, the 
whole dead stock employed in production declines in value while 
man^s value rises, as he is by all these changes the master of 
larger utilities. The power of his labor to command the service 
of capital rises ; that of capital to command his labor declines ; 
the inequality of laborer and capitalist tends to disappear. 

The Italian economist Ferrara in the introduction to the twelfth volume 
of the Bihlioteca degV Economisti (Turin, 1852), says of this definition: 
" Carey [in 1837], and after him Bastiat [in 1850], have introduced a 
formula a posteriori, that I believe destined to be universally adopted j 
and it is greatly to be regretted that the latter should have limited him- 
self to occasional indications of it, instead of giving to it the import- 
ance so justly given by the former. In estimating the equilibrium between 
cost to one's self and the utility to others, a thousand circumstances may 
intervene ; and it is desirable to know if there be not among men a law, a 
principle of universal application. Supply and demand, rarity and 
abundance, etc., are all insufficient and liable to perpetual exceptions. 
Carey has remarked, and with great sagacity, that this law is the labor 
saved, the cost of reproduction — an idea that is, as I think, most felicitous. 
It appears to me that there cannot arise a case in which a man shall 
determine to make an exchange, in which this law will not be found to 
apply. I will not give a quantity of labor or pains, unless offered in ex- 
change«for a utility equivalent, and I will not regard it as an equivalent, 
unless I see that it will come to me at less cost than would be necessary 
for its reproduction. I regard this formula as most felicitous, because, 
while on the one hand, it retains the idea of cost, which is constantly 
referred to by the mind, on the other it avoids the absurdity to wb'cli we 
are led by the theory, which pretends to see everywhere a value equivalent 
to the cost of production ; and finally it shows more perfectly the essential 
justice that governs all our exchanges." 

§ 128. In regard to the quality and the rewards of labor, 
therefore, the same law of progress holds as in regard to food 
and land. As society advances in numbers and wealth, there is, 
unless bad economy prevent, a constant progress from worse to 
better. With the growth of wealth and of numbers, the power 
of combination increases, with great increase in the productive- 
ness of labor and the power of accumulation. 



GREAT AND PETTY INDUSTRY. 127 

What are the chief forms of bad economy that prevent the 
laborer from profiting fully by the growth of society ? 

(1) When the steps in the progress of improvement are very 
sudden and great, a considerable amount of suffering is often 
inflicted ; but this is temporary and, to much greater extent 
than is commonly supposed, can be avoided. The introduction 
of labor-saving machinery is an instance of what we mean ; a 
much more striking one was the transition during the last 
quarter of the eighteenth century from hand to steam power, 
and from the workshop to the factory system. 

The old school-books used to tell us that " it takes ten men to 
make a pin." But since that day an inventive mechanic has 
put together a machine that only needs to be fed with wire, 
well oiled and supplied with steam-power, to turn out complete 
pins, sort them, and even thrust them into the papers in the 
right numbers and in straight rows. What is to become of the 
ten pin-makers ? In any community in which industrial progress 
is constant, there will be openings for their work. Even Mr. 
Mill, who believes that such inventions have not "lightened the 
toil of any human being," admits that "they have enabled a greater 
number to live the same life of drudgery and imprisonment." 
Why is this the result? Because pins made by the new process 
are so much cheaper than before, that the demand for them is 
greatly enhanced, and when this demand has reached its natural 
height the whole number of persons employed in the manu- 
facture (including miners, machine-makers, engineers, &c.) is 
greater than it was before. As the money then needed to buy pins 
for a family is much less than it was, there is something left 
to buy other things, and to pay the men who produce them. 

Furthermore, machinery supersedes muscle but not brains, 
force but not intelligence. It drives men from low-priced, 
mechanical work, to employments that demand a higher capacity 
and command higher pay. Increasing the productiveness of 
labor, it increases also the workman's share of its results. And 
this share is not to be conceived as lying idle in the hands of those 
that earn it. It is again expended in employing other workmen 
by purchasing necessaries and comforts. 



128 ELEMENTS OF POLITICAL ECONOMY. 

The change in methods of work (by its demand for adaptive- 
ness), and the quality of the new kind of work, both demand a 
large measure of intelligence in the workman. The amount of 
suiFering and privation involved in such a change, is exactly 
proportional to the ignorance and general backwardness of the 
working classes. For this society is directly responsible. 

§ 129. The transition from industry organized on a small scale 
to the larger industry of the factory system was begun in Lan- 
cashire in 1790 by Richard Arkwright, and has been one of the 
greatest of industrial revolutions. It grew naturally out of the 
invention of the steam-engine, and the application of a power that 
moves a hundred looms or spinning jennies as easily as a score. 
It has introduced the precision and effectiveness of military dis- 
cipline into industry, divided labor more thoroughly, assigned to 
every workman his position, and reduced the loss of time and 
of material to a minimum. It thus rendered the labor of the 
workman far more productive than when he wrought in isolation, 
flinging the shuttle and tramping down the treadles by the force 
of his own muscles. It consequently increased the wages of 
his industry, while it diminished the value of all manufactured 
goods. The transition to the industry of the factory did not 
begin in the United States till the second decade of the present 
century, but since that date the wages of workmen have been 
doubled, and that of workwomen trebled, while the purchasing 
power of both has advanced at a still swifter rate. 

It may be questioned, however, whether the change was not 
more sweeping than it need have been if the working classes 
had been fully alive to their own interests, — and therefore more 
injurious, temporarily, to their interests. Large intelligence 
and large capital went together in effecting the change. It 
was assumed on all hands that the steam-engine can only be 
employed with economy as the motive power of a large estab- 
lishment, which experience shows to be untrue. Small em- 
ployers shared in the prejudice of their workmen and the 
uneducated generally against the new invention. Instead of 
accommodating themselves to the logic of facts, they resisted 



VARIED INDUSTRY RAISES WAGES. 129 

the change, and were swept into the large factories by the force 
of circumstances, before they knew. The restoration of petty 
Industry in a new form, with all the advantages of discipline, 
intelligence and machinery, is one of the most desirable of 
changes in the future. 

§ 130. (2) A French workman has well said that " when 
two workmen run after one master, wages fall ; they rise when 
two masters run after one workman." Had he said "two sorts 
of masters," it would have been even truer. " There is rarely 
competition for labor within a trade in a particular place, unless 
there be competition for it from without'^ (Leslie). The more 
openings there are for the laborer to invest his capital (which is 
his labor), and for the capitalist to invest his (which is the accu- 
mulation of past labor), the better each will be remunerated. 
Hence the connection between varied industry and fair wages, as 
well as fair profits. In any country (or even district) in which 
that is wanting, labor will be but poorly paid, and especially so, if 
agriculture is the only pursuit open to the great body of the 
people. Furthermore, that form of industry, as a rule, furnishes 
employments that are suited only to able-bodied men, and con- 
sequently, if there be not a fair admixture of manufactures, 
those who are not equal to hard, out-door work, are left 
dependent upon those who are. With the rise of a varied in- 
dustry, the number of workers rises to a maximum, that of idlers 
sinks to ajninimum. A field sown with various sorts of grass 
seed yields a larger crop than if one kind only be used, because 
each finds special nourishment in some single element of the soil; 
and so is it with the employment of all the elements of in- 
dustrial power. 

In later English history^ the manufactures have become con- 
centrated in London and in the midland and northern shires. 
Between 1770 and 1850, wages rose 66 per cent, in the twelve 
northern shires and 100 per cent, in Lancashire and the West 
Riding of Yorkshire : in eighteen southern agricultural shires, 
only 14 per cent., although food and cottage-hire were far 
dearer. In the former two sorts of masters run after one work- 
9 



130 ELEMENTS OF POLITICAL ECONOMY. 

man ; in the latter the growth of population has no outlet save 
in farming; local capital, of which labor is the most perishable 
form, has no other investment, and two workmen run after one 
master. In Ireland the principle is seen still more clearly. The 
south is now not over populated, but under populated ; whole 
districts are desolate and idle ; yet nowhere are wages above 
eight shillings a week, though food is nearly as dear as in 
England, to which everything is now carried. In the north, 
the eastern three counties have a very different rate of wages. 
*' T' ^hat vast system of manufactures, which now stretches over' 
several counties, it is around towns in which population has 
doubled in half a generation, that agricultural wages are high- 
est" (Leslie). The north, from the first days of the Ulster 
plantation, has had two sorts of employers running after every 
workman. 

§ 131. (3) Laws made in the interest of the upper classes 
very greatly interfere with the well-being of the working classes, 
especially the farm-hands. Till very recently the right of the 
workingmen peaceably to combine to secure higher wages was 
denied and its exercise punished on both sides of the Atlantic^ 
although no law forbade the employers to combine in depressing 
wages. Till very recently the treasurer of a Trade's Union in 
England might rob it with impunity; the law would not punish 
him. The Unions were outlawed, though their members since 
1824 were not. 

Laws not made for any such purpose have often been perverted 
in their application to the great injury of the working classes. 
Thus under the old English poor law, the farmers in many dis- 
tricts by combined action beat down their workmen's wages to 
such a point, that the latter were forced to " come upon the 
parish," by asking relief as out-door paupers. The guardians 
were required by the law to find them work, which they did by 
supplementing their wages up to the point required for their 
subsistence. Thus able-bodied men, who fairly earned a living, 
were degraded to the rank of paupers in order that the whole 
jjomnauQity might be forced to contribute to the farmer's profits.l 



LAWS AGAINST LABOR. 131 

" He was virtually able to put his hand into the pockets of the 
neighboring rate-payers to make up the deficiency to those whom 
he employed" (Fawcett). The consequences were most disas- 
trous; the spirit of the people was broken, and pauperism 
increased so vastly that it absorbed in some parishes more than 
half the rent of the land. In some cases the land was actually 
ofi'cred to the paupers to till for themselves and refused; they 
preferred to live on alms. Could there be a worse economy of 
the wealth-producing forces of a nation than the destruction of 
the thrift, the self-respect and the hopefulness of the con^ 'on 
people ? 

§ 132. The method of prison discipline commonly adopted in 
this country tends to do injustice to the working classes. In order 
to make the prison self supporting, the labor of the prisoners is 
hired out to a contractor, or some industry is practised by the 
prisoners, and its products sold for the benefit of the State. In 
either case the tendency of the system is to force down the wages 
of the free workman. The State cannot brins: its bondsmen 
into the labor-market either directly or indirectly in such a way 
as to secure the full market price of their work. No man will * 
hire convict-labor except on terms specially favorable to himself. 
No State can dispose of the articles made by convict-labor except 
at lower rates than are usual for such goods. There is no objec- 
tion to making convicts work ; on the contrary, every one recog- 
nizes the usefulness of work as a moral discipline. But the work 
should be in the production of articles needed for the prison's 
use. In this way the prison should be directly self-supporting 
by supplying all its own wants of food, clothing, furniture and 
the like. • 

§ 133. (4) The disproportionate outlay of the workingman's 
savings upon objects of luxury, instead of a wise saving, is 
justly alleged as a cause of misery to the class. Thus the ex- 
penditure upon spirituous liquors is a heavier tax upon the 
earnings of the laborer than all others put together. But the 
remedy and therefore the responsibility of this state of things 
is partly with society at large. It is in the improvement of the 



132 ELEMENTS OF POLITICAL ECONOMY. 

homes of the poor, and in furnishing them with mental resources 
and proper places of resort. So long as the gin-shop and the bar- 
room are to the modern workman what the church was to the 
peasant of the Middle Ages, viz. : the only clean, warm and 
well-lighted room that he is welcome to visit in his hours of 
leisure, — so long will he go to them. " The main exciting 
cause of drunkenness is, I believe, bad air and bad lodging" 
(Chas. Kingsley). Alcohol is sought as the only accessible 
relief from the physical prostration and mental depression that 
bad habits of living produce. Drunkenness was once universal 
in the highest classes of society; "drunk as a lord'* was an 
English proverb. It has decreased, no doubt with the growth 
of habits of personal cleanliness, and with a larger intelligence 
as to the conditions on which good health may be enjoyed. 

In some parts of Sweden they have eflFected a thorough reform of the 
tavern, without attempting to abolish it. The right to sell liquor in a 
district is put up at auction by the government, and bought in by an 1 
association of the friends of temperance. They open the number of ' 
houses that the law prescribes and at the legal hours only. They sell 
other drinks and food as well as pure liquors, and allow of no solicita- 
tion to purchase the latter. No person who has had " enough " can get _ 
any more. The association furnish pleasant rooms to which the work- ll 
ingman can invite his family, and provide books and periodicals. The 
proceeds, after paying all expenses, go to local charities. 

The diflFusion of education will both directly and indirectly 
work to the same end. When this has multiplied the number 
and elevated the character of his enjoyments, the workman will 
no longer seek happiness in sordid physical gratifications. Per- 
haps he will then come to learn — as no class has yet learned 
— ^the vast importance of the way in which a people dis- 
poses of the small surplus left it, after the necessaries of life 
have been provided. Everything that impoverishes mind and 
heart tends to increase the outlay upon articles of false luxury 
which are rather hurtful than helpful. 

§ 134. (5) Grrave injuries have been inflicted on the laboring 
classes by the conflict between labor and capital. In the absence 
of any knowledge of the essential harmony of their interests. 



I! 






trades' unions and their strikes. 133 

or at best from the notion that the interests of the "workmen 
were consulted by keeping down wages to the n.;itural level, 
English employers, with the approval and support of English 
economists, have striven to get their work done at a minimum 
rate of wages. The workmen, finding individual resistance use- 
less, organized for combined effort, and fixed rates of wages for 
their respective trades. Their right to associate and to refuse 
to work for less than this seems plain enough, but the governing 
classes denied the right, and treated these Unions as unlawful 
conspiracies. Being thus put out of the pale of the law, the 
Unions unhappily, but not unnaturally, fell into lawless methods 
of securing their ends. They had the right to use all persuasive 
methods to induce those who did not belong to the Union and 
comply with its rules, to become members, and failing in that 
to refuse to work in the same shop with them. But they went 
beyond all lawful limits to force outsiders into membership, and 
to force them from work during " strikes," as thnj called the 
temporary suspension of work intended to force masters to raise 
wages. " Rats," as these outsiders were called, had their tools 
destroyed, their persons assaulted, their houses attacked, some- 
times by explosive substances ; and in a number of cases their 
lives were taken. 

It is a question whether the Trades' Unions have accomplished 
the ends of their organization. The figures presented by Mr. 
Thornton in his work on Labor seem to show conclusively that 
they have ; that the hours of labor have been reduced, and that 
rates of wages that would never have been attained without com- 
bined action, have been thus secured, and that the end of the 
process is not reached. This indeed is contrary to the teachings 
of English economists that there is a limited wage fund subject 
to the demands of labor, and that the average share of each 
workman can only be increased by reducing the number of 
claimants or increasing the fund. " Workmen are solemnly ad- 
jured, in the name of political economy, not to try to get their 
wages raised, because success in the attempt must be followed 
by a fall of profits, and bring wages down again. They are en- 



134 ELEMENTS OF POLITICAL ECONOMY. 

treated not to better themselves, because any temporary better- 
ing must be followed by a reaction that will leave them as ill off 
as before." " To go on reasserting that unionism does not raise 
wages, and that to all appearances permanently, would now-a- 
days be running too completely counter to every-day experience. 
To assert that it cannot raise them, is the utmost extent to which 
any but the hardiest theorists still venture to go" (Thornton). 
True it is that strikes have frequently, perhaps in a majority 
of cases, ended with a victory for the masters; but the very 
rise in rate thus successfully refused has been almost always 
conceded afterwards to prevent a renewal of the strike; and 
the gain thus made, when the aggregate of increase is com- 
puted, has been such as to cast into the shade all the sacrifices 
and losses incurred during the strike. 

§ 135. Trades' Unions* strikes need not succeed if the masters 
would unite as closely and cooperate as heartily as the men. 
As a rule the employers are taken in detail. The strike for an 
advance is made in a few establishments, and those that it throws 
out of work are supported by the members of the Union at work 
elsewhere. Succeeding in these establishments, they then make 
the same demands in other quarters, and with the same result. 

-Strikes have utterly failed in a few cases, where the masters 
throughout a whole trade have at once discharged all members 
of the Union, thus retaliating by what is called a " lock-out." 
But as a rule the employers of labor have not the means of 
effecting close association, that their workmen possess. Busi- 
ness makes them rivals ; they are often blindly exulting in the 
embarrassment of a brother capitalist, when they might well 
read in it a prophecy of what is coming on themselves. Nor 
have they any of the vigorous class feeling and opinion, which 
enables the workingmen to compel unwilling associates to fall 
into line. 

§ 136. These Unions, originating in England about half a 
century ago (at first merely as Benefit Societies, which most of 
them still are), have spread into France and Germany, and the 
United States. They were brought across the ocean by English 



THE RESTORATION OP HARMONY. 135 

and Welsh operatives, attracted to our shores by the superior 
advantages possessed by our working classes. They are still an 
exotic on our soil ; their strikes are generally in the hands of 
persons of foreign birth ; they have never attained the complete- 
ness of organization and the effective management that character- 
ize those of England. This is due to the fact that there is 
really no such need of them in a country vphere every man can 
leave the workshop and become a farmer if he will; where the 
supply of skilled woj;kmen generally falls far below the demand ; 
where the utmost freedom of association co-exists with the habit 
of spontaneous action ; where wages are steadily and materially 
advancing; where public sentiment gives no support to the doc- 
trine that low wages are best; and where social and political 
prestige is rather on the side of numbers, than on that of wealth 
and the capitalists. They have unquestionably checked the 
growth of some of our industries by limiting too much the 
number of persons who may be admitted as apprentices, a rule 
that does far more mischief in a rapidly expanding country than 
in one that is nearer the limit of its industrial capacities. But 
after all, it must be borne in mind that united action is in many 
cases the best and most effective means for labor to secure fair 
terms in dealing with capital ; and that there is in the Trades 
Union itself, apart from the outrages sometimes perpetrated in 
its name, nothing to call for reprobation. 

§ 137. Labor and capital in conflict are in an unnatural state ; 
harmony is their true relation. For reasons already given, 
capital finds its account in the cheerful service of labor, not in 
its discontent. To labor, capital is a benefactor in the highest 
sense ; were the whole class of capitalists with all their accu- 
mulations to be annihilated, labor would be reduced to indigence 
and a struggle for existence more severe than can easily be con- 
ceived. The capitalist is the captain of industry, who takes 
the unorganized mob of men, drills it into a disciplined army, 
supplies them with weapons, ammunition and a commissariat, 
and leads them to industrial conquests. He is able to do so be- 
cause he has accumulated instead of merely consuming; his 



136 ELEMENTS OF POLITICAL ECONOMY. 

right to his million rests on exactly the same ground as the 
workman's right to his week's earnings. 

By what method to restore a lasting harmony between the 
two, is a great question of the day. The first and simplest 
method is by arbitration. Where it is possible to obtain referees, 
in whose impartiality and intelligence both parties have confi- 
dence, and where both are ready to submit their case, disputes 
are easily settled and harmony restored: The ordinary courts 
of justice are not available for the purpose, i)ecause they cannot 
adjudicate the terms of contracts not yet made^ and because the 
judges have no special acquaintance with the matters at issue. 
The establishment of tribunals of arbitration chosen from both 
masters and men, with the sanction of government, has been 
^ccessfully tried in England, and these have put an end to 
several recent strikes and lock-outs. Something like these, 
though more official in their character, were the Conseils de 
Prudhommes of mediaeval France, which were revived by Na- 
poleon I. in 1806 ; but the latter are rather government courts 
of selected experts to decide legal issues. 

§ 138. A second solution is ofi'ered by the system of coopera- 
tion^ whose advocates would abolish the conflict between capitalist 
and laborer, by uniting the two functions in the same persons. 
They would have workingmen unite their savings to establish a 
workshop of their own, to be managed by foremen of their own 
selection under rules adopted by the whole body. 

Instances of this industrial method are to be found very early 
in our own country. The Greek merchant marine is based on 
the same principle, and it has secured, through the zeal and 
energy of its sailors, nearly the monopoly of the carrying trade 
in the Mediterranean. But the first proclamation of the method 
as a means to revolutionize industry and commerce was made by 
the socialist Robert Owen, His design was to set up coopera- 
tive stores rather than workshops ; to abolish the profits of 
middlemen rather than to get rid of the wages system. About 
1824-30 many societies were formed on this basis to make 
" every man his own shopkeeper.^' The most successful was the 



CO-OPERATIVE INDUSTRY. 137 

" Rochdale Equitable Pioneers," organized in 1844. The politi- 
cal troubles of 1848-50 called attention to this method and to 
successful applications of it to industry in France. The Christian 
socialist party (F. D. Maurice, Chas. Kingsley, Thos. Hughes, 
J. M. Ludlow, &c.) urged its general adoption as a remedy for 
the deadly competition of the wages system. Every man was to 
be his own employer as well as his own shopkeeper. In spite 
of many failures, cooperation has an honorable record of suc- 
cesses to show in France, England, Germany, Spain and the 
United States. 

If considered as intended to supersede the wages system en- 
tirely, co(5peration is open to serious theoretical and practical 
objections. In the light of the true law of social progress 
(§ 30^, it will be seen to be a decline in industrial organization, 
when duties and functions that have been distributed among 
several persons are united in the same person. It would be a 
loss on all sides, were the captain of industry to cease to exist, 
and were his functions to be vested in the whole body of work- 
men. The singleness of purpose, the clearness of outlook, and 
the energy that large industrial operations demand, could never 
be brought into play by an association of workmen, or by dele- 
gates chosen from their ranks and subject to their control. As 
a rule, the possession of capital is itself the gauge of business 
capacity, and of the power to organize and administer an estab- 
lishment. To exclude those who possess these from their 
present position, would be to deprive industry of its natural 
and trusted leaders. Now if cooperation were to become uni- 
versal they would become mere money-lenders, or else their 
capital would be entirely withdrawn from the sphere of produc- 
tion, — a loss of the results of past labor that would be eminently 
deporable. 

In practice it has been found difficult to secure the right sort 
of men to take the place at the head of cooperative establishments. 
Men of the necessary qualificatidns are generally able to com- 
mand their own price elsewhere, and are too well satisfied with 
their positions to give them up to begin a mere experiment here. 



138 ELEMENTS OF POLITICAL ECONOMY. 

And if they did, the estimate put upon their services by their 
new associates is commonly much below their deserts, so that 
they would soon be glad to go back to their old places. In 
the absence of first-class men, it is commonly not the second 
class that are chosen, but rather men of an inferior grade but 
more showy qualities. 

§ 139. Less open to objection as a solution of the question is 
the plan of industrial 'partnerships. In this, the proprietor of 
an establishment agrees to pay his workmen the current rate of 
wages, and also to distribute among them at the end of the year 
all or part of the net profit above a certain percentage, say 15 
or 20 per cent. This method identifies the interests of labor 
and capital without confounding their functions. The men are 
stimulated to do their utmost, — to avoid all waste as tending to 
diminish profits, and all careless work as injuring their market, 
— and to keep each other up to the mark by the force of public 
opinion. 

This plan also is no novelty in our own country. Thus in 
Albert Gallatin's Grlass Factory (established in 1791 at New 
Geneva, Pa., being the first west of the Alleghenies), every 
workman had a direct interest in the profits, besides regular 
wages. The whale fishery and the China trade were managed 
on the same principle. It was first urged upon the attention of 
Europe by Charles Babbage in his Economy of Manufactures 
(1829). A Parisian house-painter, after making trial of the 
wages system in 1842, took his workmen into this limited sort 
of partnership, with moral and financial results that attracted very 
great attention, and led to its imitation by a considerable-number 
of establishments in France and not a few in England. It has 
been found that the plan restores thorough good feeling between 
masters and men, where the worst irritation has existed for 
years ; that it makes the workmen eager to adopt improved 
methods, which they would previously have resisted to the utmost; 
that it diminishes the amount of drunkenness and thriftlessness, 
and reduces to a minimum the number of holidays spent in 
dissipation ; that it creates a vigorous public opinion against eye- 



INDUSTRIAL PARTNERSHIPS. — CREDIT BANKS. 139 

service and waste, and leads men to pride themselves upon giving 
good work for their wages. In some cases the amount of profits 
reserved to themselves by the firm, was fixed at a higher percen- 
tage than they had ever earned ; and yet at the end of the year 
they had a surplus to divide with their workmen. 

The plan has been adopted in a good number of American 
establishments, but it may fairly be hoped that it will be ex- 
tended to many more, as it seems to be the least objectionable 
and the most effective of all the new solutions of the labor ques- 
tion. Of course circumstances will demand manifold modifica- 
tions of the principle. The number of laborers employed in 
proportion to the capital invested, must determine what is the 
proportion of the surplus that will fall to capital and labor 
respectively. In case the business has suffered losses, it might 
perhaps be both wise and just to recoup those losses out of the 
profits of following years. All these details are open to 
equitable adjustment at the start, or to arbitration as cases of 
disagreement arise ; but the great thing is to get the workman 
to feel that he is working for himself and has something to hope 
for as the result of his skill and diligence. 

§ 140. Another modification of the principle of cooperation 
is that introduced in Germany by Schultze-Delitzch. In that 
country industry is not so generally organized on the grand 
scale as is common in England, France and America ; a great 
part of their workshops are very small establishments, often 
managed by a single family. If these were to have their 
materials at the lowest price they must buy them at wholesale to 
save commissions ; to this end there were organized raw material 
associations, that they might combine their capital for such pur- 
chases. Then came the establishment of public bazaars by these 
or similar associations, for the sale of their wares. But it was 
found that these workmen had but little capital and no credit; 
they could offer no sufficient security to induce the banks to 
lend them even the small sums that they needed; for a working- 
man's capital is his health and strength, and his death or serious 
illness destroys it. But if the single workingman has no credit, 



140 ELEMENTS OF POLITICAL ECONOMY. 

a large body of them organized on the principle of mutual 
security would have credit enough ; if one or a few died or were 
ill the rest would be the bank's security. Associations were 
therefore formed to establish loan banks or people's banks, as 
they are variously called ; and these banks make advances to 
their shareholders on such terms as put them on an equality with 
the rich. 

The movement began in 1850. In 1872, after twenty-two years of slow 
and steady growth, there were 442 assoeiations for purchase of raw 
materials and sale of wares; 2220 banks to make advances to workmen. 
Of these banks, 807 reported 372,742 members; loans, 359,519,200 thalers; 
capital, 21,373,529 thalers; deposits and borrowed capital, 77,188,731 
thalers. (A thaler is seventy-two and a half cents.) This group of 
banks is connected with a central bank, which negotiates loans for them 
in the money market. 

§ 141. The question of the rate at which woman's labor 
should be paid, and of the employments that should be open to 
her, is one of the living issues of our time, and must not be 
passed over. 

The rate at which she is paid is often alleged as an instance of 
the power of custom, and unjust custom besides. For doing 
exactly the same sort of work, it is said, and doing it quite as 
well, she receives far less pay than a man does. Custom, no 
doubt, has its influence here ; the more rapid advance of woman's 
rate of pay seems to indicate as much. But there is reason as 
well as custom for the difference. 

(1) Men are more steady workmen than women are. The 
latter, rightly or wrongly, all but a small minority, look forward 
to marriage and the care of a household as their true career. 
For this reason they do not concentrate their attention upon 
their calling with the same singleness of eye as men show. 
Nor have they, as a rule, the same power of continuous applica- 
tion, although they have far more natural quickness. The 
superintendent of the Elgin Watch Factory told me that the 
women employed there learnt far more during their first fort- 
night than men did ; but there they stopped, while the men 
went on learning all their lives. 



wOxMan's work and wages. 141 

(2) Through the limitation of the number of employments 
open to women, they are driven to underbid each other for work. 
By " employments open to women " are meant those that their 
prejudices will allow them to enter, not merely those that are 
fit for their sex to undertake. The position of household ser- 
vant, for instance, is one that very few American-born white 
women will now accept. Nor is it of any use to argue the ques- 
tion, or to hold up the example of a few ladies of high culture 
and slender purse; the position of direct control by an indi- 
vidual will, that is bound by no rules save such as it extemporizes 
from time to time, is become intolerable to them. They fly from 
it to the store, the factory, the school-room, and finding all these 
insufficient, they will sew for slop-shops and die of slow starva- 
tion rather than go to the kitchen. German and Irish women, 
and Chinese men, are the only material to be had to fill these 
vacancies, to the varied discomfort of the mistresses of the 
households. 

The plan of cooperative housekeeping in cities and towns 
offers a solution of the difficulty. By this, cooking would be 
conducted in a large central establishment, under the manage- 
ment of superior chefs^ and the purchases made by experienced 
caterers under the direction of a committee of housekeepers. 
This change would be in the same line as that which removed 
the work of spinning and weaving from the list of household 
duties ; it would cheapen living to both rich and poor, by 
enabling wholesale purchases ; it would give an opportunity for 
the application of scientific principles to the art of cooking; and 
it would furnish congenial and well-paid work to a large per- 
centage of the women now out of employment. Nor would it 
be impossible to apply the same cooperative principle to other 
parts of household work, and relieve the mistress of the family 
from the necessity of depending on the services of a class, who 
— with some exceptions — are certainly not improved and human- 
ized by their position. * 



CHAPTER EIGHTH. 
The Science and Economy of Money. 

§ 142. The progress of society from slavery and poverty and 
isolation to freedom, wealth and association, involves not only a 
progressive differentiation of its members and of their functions, 
but also a constantly increasing interchange of services between 
these. The more developed the society, the greater the inter- 
dependence of its members, and the more numerous and rapid 
these exchanges. With the solitary backwoodsman they have 
no existence, and he must overcome nature's resistance and 
master her utilities unaided. But when the country begins to 
be settled, these exchanges begin ; if a town spring up, they 
become more numerous and rapid ; if the town grow into a city, 
the system of mutual service becomes complete. 

These exchanges are at first effected by barter, or the direct 
exchange of commodity for commodity. But a little experience 
shows this process to be both awkward and wasteful. The 
artisan might waste more time than he spent to produce his 
commodity, in searching for a customer whose wants and pos- 
sessions were the exact complement of his own. AVhere a single 
article that varied in the value of its parts, such as the carcass 
of a cow, had to be divided among a great number of customers, 
the adjustment of values was nearly impossible. This led to 
the setting apart some one commodity which should be the 
representative of all estimable values, and should be the instru- 
ment of these exchanges and therefore of human association for 
mutual help. Cattle (peciis), being the first form of personal 
property (pecuh'um or chattels), was first used as money (pecuma). 
Afterwards silver, and probably somewhat later gold came into 
use. The scarcity of these precious metals, and their eminent 
fitness for making ornaments, had, doubtless, brought them into 
general demand and caused them to be held at a very high price. 
The transition to their use as money was gradual and natural. It 
142 



COINED AND UNCOINED MONEY. 143 

is impossible to trace the early history of their adoption. The 
oldest historical records tell us that they were already in use, 
though not yet coined, in the patriarchal age, — that is, at a time 
when the family was still the largest social unit among peoples that 
afterwards played a part in ancient history. The first coins were 
in the form of animals, as indicating that they were substitutes 
for cattle. Afterwards they were coined in small, flat masses of 
equal weight and a recognised degree of purity, with an image 
and superscription, which now give these pieces a great historical 
interest. 

Money is therefore the instrument of exchange and of asso- 
ciation. It is more usually defined as " the instrument of 
exchange and the standard of value." In a popular, not a 
scientific sense, it serves as an instrument for the comparison 
of values. But as value is the measure of nature's power 
over man, and as money, like every other commodity, falls in 
value with the growth of that power, it. is more scientific to 
regard labor as the standard of value, that being the means by 
which nature's resistance is overcome. It is true that in setting 
aside any commodity for use as money regard is had to its com- 
parative fixity of value. This is the consideration which deter- 
mined the selection first of cattle, and then of the precious metals. 
But neither these commodities nor any other possess that fixity 
which entitles them to rank as scientific standards alongside the 
standards of weight and measure. 

This usual definition errs also by defect. Money is the instrument 
of association as well as of exchange. The absence of it tends 
to isolate menj to prevent the formation of industrial relations 
among them, and to keep labor down to an unproductive level. 
Its abundance enables the organization and drill of the industrial 
►forces, and the direction of their energies to the best purpose. 

Association is the largest fact in economic experience. It is 
the exchange of services not only within the range of contract, 
but among millions who never see each other. The payment of 
two cents for a morning newspaper brings its purchaser into as- 
sociation, to that extent, not only with the people actually engaged 



144 ELEMENTS OF POLITICAL ECONOMY. 

in its editing, composition and press- work, but with paper-makers, 
ink-makers, miners, lumberers, telegraph-agents and so forth. 

§ 143, The adoption of any form of money as the instrument 
of association and exchange was a clear advance upon barter. 
In barter every commodity discharges two functions at the same 
time ; it is both goods and money. In the new method of ex- 
change the two functions are separated ; money and goods 
become separate things. Nor is a vast amount of material 
thereby withdrawn from other uses : a very small amount of 
money suffices to effect a very large number of exchanges, and 
no country needs anything like as much money as it has pro- 
perty ; it might as well have wagons and railroad carriages ' 
enough to convey all its movables at once. Very much of its 
property never changes hands, except by inheritance; a still 
larger amount not once in a long series of years. At most a very 
small amount changes hands in the course of a single day, and 
there is no use for as much money as will represent this amount. 
The same sum (be it coin, or notes, or credit represented by a 
check) may be used repeatedly in the same day, and thus dis- 
charge many times its own amount of indebtedness. The most 
perfect money is that which changes hands with greatest 
rapidity j the more rapid its circulation the greater its useful- 
ness. " The proportion borne by money to commerce decreases 
in advancing societies" (Carey), and by consequence its rate of 
interest, or the price paid for the use of money, falls with every 
advance in its usefulness. Brutus got fifty per cent, a year; 
Rothschild will lend at four. 

The precious metals have many qualities that fit them for use 
as coined money. They are not liable to rust; they are easily 
alloyed with baser metals and as easily separated ; they receive 
a stamped impression easily and retain it firmly; they are not* 
easily worn or abraded ; they are readily distinguished from 
other metals. Their defects are their weight, their intrinsic value 
as commodities, and hence the real loss of value by such abra- 
sions as they suffer. So long as we use as money what possesses 
a very considerable value for other purposes, and is liable, to be 



VALUE OF THE PRECIOUS METALS. 145 

diverted to other uses, we cannot be said to have attained the 
complete separation of the function of money from that of com- 
modities. 

That these metals should be used at all as monev is a matter 
of convection or general agreement merely. But that conven- 
tion once established, their value in circulation, like all other 
values, is not conventional, but is determined by the cost of 
reproduction. If, however, the general agreement to use them 
as money were to cease, and they were to be demonetized, the 
excessive supply for other uses would cause their purchasing 
power to decline very greatly. Their intrinsic utility would, in- 
deed, be more generally made use of, since they would be fai 
more generally employed in the arts than at present, and in this 
respect there would be a net gain to mankind in the change. 
Their use — especially that of gold — as ornaments would cease 
on this decline in price, and this would make them still cheaper. 
However well fitted their color and brilliancy to attract the eye 
and please the fancy of childish savages, the refined taste of 
civilized man would cast them aside as barbarous. They still 
hold their place in the toilet because they are " condensed 
wealth, the trophies of industrial warfare," analogous to the 
savage's string of scalps. Very few of the articles made of 
them have any artistic merit. 

§ 144. They are difficult of reproduction, and therefore valu- 
able, because they are scanty in supply and hard of access in 
their natural deposits. Grold especially is found in very small 
quantities, and to dig for it is — considering the number of per- 
sons employed in it — the most unprofitable of human employ- 
ments. It has the fascination of a lottery, in which a few suc- 
ceed, but thousands fail. The Mexicans have a saying that he 
who mines for copper will grow rich ; he who digs for silver may 
or may not; he who seeks gold never will. Were it otherwise, 
success would defeat itself, through the decline in the value of 
its products. 

These metals are, therefore, a very expensive instrument for 
effecting exchanges. They require a vast outlay of capital, labor 
10 



146 ELEMENTS OF POLITICAL ECONOMY. 

and intelligence, that might otherwise be expended in producing 
what would directly meet and satisfy the primal needs of hu- 
manity. " It is a heavy price, and each ounce of gold repre- 
sents so much labor withdrawn from agriculture and other indus- 
trial pursuits, which minister directly to the comforts and 
necessities of mankind." 

See R. H. Patterson's Econoviy of Capital (1864). 

These two metals do not circulate equally in all parts of the 
world, nor is their purchasing power the same everywhere. 
Since 1771 gold alone is " legal tender" for large payments in 
England; i. e., is such an offer of payment as the creditor must 
accept or forfeit his claim to interest. 

At the beginning of our own government both gold and silver 
were made legal tender, but owing to circumstances silver was the 
metal chiefly employed. In 1834 the standard of our coinage 
was changed from 1 : 15 to 1 : 16, thus favoring the use of 
gold. Silver-using countries of Europe sent us gold in exchange 
for our silver, thus effecting a profit to themselves at a loss to 
us. In 1873 a law was passed, without much consideration, de- 
monetizing silver; but in 1878 this law was repealed. Silver 
was again made legal tender, and its coinage in limited quanti- 
ties for government account was ordered. The law of 1873 was 
prompted by the change which had taken place in Europe. In 
1871, Germany, taking advantage of the large accumulation of 
gold in her treasury through the payment of the French war-in- 
demnity, determined to substitute that metal for the silver of 
which her coinage had been made chiefly. A few of the lesser 
states followed this example of demonetizing silver, and the 
states of the Latin Union which still retain it in use have been 
forced to suspend its coinage. Germany was moved to take this 
step partly by the example of England, and partly by exagger- 
ated reports of the productivity of our Nevada mines. She has 
sustained serious losses in consequence of it, since she has not 
been able to dispose of the silver which she called in, except at 
a much lower price; and the knowledge that she holds large 



EFFECTS OF DEMONETIZING SILVER. 147 

amounts for a rise in the market has tended to keep the market 
depressed. Besides the discredit thus brought upon silver by 
laws for its demonetization, its price has been affected through a 
serious interruption of its outflow from the silver-producing to 
the silver-using nations. Formerly the East India trade carried 
to the East a large amount of surplus silver every year. But 
since India became heavily indebted to England through loans 
raised in England to pay for railroads and other public works in 
India, the East Indian government has to meet the interest on 
these bonds in London by large sales of exchange on Calcutta. 
As a consequence the export of silver to pay balances of trade 
due to India has been stopped, and this surplus accumulates in 
Europe to the disadvantage of the holders of this metal. 

It is generally recognized that this process of discrediting silver 
by demonetization must come to an end, and several international 
conferences have been held to secure its general restoration to the 
coinage of the world. But thus far there has been no result from 
these, as the nations which employ gold exclusively show no dis- 
position to retrace their steps, and the others will not resume the 
coinage of silver until they do so. 

It is argued by the opponents of the restoration of silver that 
the supply of that metal has been excessive and irregular for 
years past, and that there is no reason to expect anything but a 
continuance of this. The figures, however, show that the annual 
product of gold and silver taken together is much more constant 
and regular than is the product of either of them. It is also 
said that silver having fallen below its former value, remonetiza- 
tion would only result in flooding the world with a debased coin- 
age. But the fall of silver is due, not so much to any increase 
in the product, as to the cessation of the demand for it in the 
mints of the world. A general agreement on the part of Europe 
and America to restore the free coinage at the old ratio would 
retrieve and maintain its price. 

On the other hand, the continued demonetization of silver must 
cause such a diminution of the supply of coin as cannot but re- 
sult in the most serious disturbances to domestic and international 



148 ELEMENTS OF POLITICAL ECONOMY. 

commerce. The mischief already done by demonetization cannot 
terminate until other countries have been forced to abandon silver. 
They cannot afford to go on using a metal which their neighbors 
have discredited, and which they refuse to take in payment of 
balances of trade. Their business, in so far as coin is necessary 
to it, will have to be transacted by means of the very inadequate 
gold coinage they possess or can procure. In Europe this will be 
felt much more quickly and severely than in America, for the 
present conditions of international trade and those we fairly may 
expect for the future, tend to transfer to America a large part of 
the gold supply of Europe. 

In the East gold has never been a circulating medium ; China 
will not accept it in payment for her teas and silks ; in India 
irold mohurs are coined, but have never been leo-al tender. Dur- 
ing the panic of 1866, Calcutta merchants offered 20,000/. in gold 
at the banks, but could not obtain even bank notes in exchange. 
To demonetize silver in the West would be to interpose a serious 
obstacle to commerce with the East. This commerce is of im- 
portance, as covering many articles to be found only in the East. 

Cowries, a species of shell, are used in the native kingdoms of Central 
Africa and some parts of India. Part of the land revenue of Orissa is 
paid in them, at the rate of 6000 or 7000 to the rupee. Similar were the 
wampum belts of our Indians. Carthage had a coinage of metal 
enclosed in stamped leather; Sparta had an intentionally cumbrous one 
of iron. Russia during the present century tried to get coins of plati- 
num into circulation, but they were bought up and withdrawn because 
of the too great variation in the commercial value of platinum. Copper 
and bronze have been commonly used for coins of small value, "but lat- 
terly an alloy of nickel and copper has been adopted by several of the 
most enlightened nations as the best material for small coins. 

§ 145. The " precious metals" are often sp^en of as " the 
standard of value," which is true only in a restricted sense. A 
standard must remain the same, however other things change ; 
and this is certainly not true of gold and silver. Their pur- 
chasing power has been continually varying, generally declining, 
as the natural deposits of their ores have been laid bare, and 
the resistance of nature to those who searched for them haa 



THE VALUE OF GOLD VARIABLE. 149 

diminished. Vast quantities of them were furnislied to Europe 
by Spanish America from<ihe conquest of Mexico and Peru, 
till the revolt of those colonies in 1810. During the thirty 
years that followed, the supply was largely interrupted, and the 
supply of money in other forms was hindered by restrictive legis- 
lation. It was a time of great popular distress, and of em- 
barrassment to the money markets of the world. Commerce 
and manufactures were growing, but the instrument of ex- 
change was nearly a fixed quantity. In 18-10 Russia began to 
work the Ural mines: the gold discoveries in California (1848) 
and in Australia (1854) came next. Since then the annual 
increase of coined money has been nearly quadrupled, and a vast 
extension of commerce and manufactures has followed through- 
out the world. 

While both the periods of increase have seen a decline in the 
purchasing power of gold and silver, in neither of them has it 
fallen in anything like the ratio of increase. Humboldt esti- 
mates that in the eighteenth century there were thirty times as 
much coin in circulation as in the fifteenth ; yet money had, on 
the very highest estimate, only twelve times as much purchasing 
power at the era of the Reformation as at present. When the 
new flow of gold into Europe began, economists of the English 
school (Chevalier, Cobden, etc.), predicted a rapid fall in its 
value ; others of the same school (Cairnes, Jevons, etc.), claim 
that this has been the case to some extent, say ten or fifteen per 
cent. But even this much is not universally admitted. " We 
haveueen," says R. H. Patterson, " three hundred million pounds 
added to the general currency within fifteen years, with so little 
effect that it is still doubted by many authorities whether there 
has been any depreciation at all.'' A small depreciation seems, 
however, to have taken place. 

§ 146. On the principles generally accepted by the English 
school, and first enunciated by David Hume in 1752, the rate 
of decrease in value should have been exactly proportional to 
the increase in amount. He says that " the only influence which 
a greater abundance of coin has in the kingdom" is " by 



150 ELEMENTS OF POLITICAL ECONOMY. 

heightening the price of couimodities and obliging every one to 
pay a greater number of these little -yellow or white pieces for 
everything he purchases." He admits indeed a temporary effect 
of quite another kind : " In every kingdom into which money 
begins to flow in greater abundance than formerly, everything 
takes a new face; labor and industry gain life; the merchant 
becomes more enterprising, the manufacturer more diligent and 
skilful, and even the farmer follows his plough with greater 
alacrity and attention." 

Mr. J. S. Mill applies the well-worn formula of demand and 
supply to the subject in this way : " The demand for money 
consists of all the goods offered for sale. . . . The money and 
the goods are seeking each other for the purpose of being ex- 
changed." Again : " If the whole money in circulation was dou- 
bled, prices would be doubled; if it was only increased one-fourth, 
prices would rise one-fourth." Mr. Mill does not appear to be 
aware of the fact that all but a small percentage of purchases 
are paid for by offset (checks, bills of exchange, etc.), without 
the use of coin. 

§ 147. The element of truth in this mechanical theory is 
separated from the falsehood in Mr. Patterson's statement : " An 
addition to the currency of a country is not necessarily a benefit. 
... If the currency be doubled, while the productions of that 
country and the demand for money remain as they were, the 
double amount will do no more than the lesser one, — only all 
prices, wages," rents, etc., will be doubled in amount. The 
prices which a farmer or manufacturer gets for his goods will be 
increased; but so also in similar proportion will be the amount 
of his outlay in rent and taxes. It is like adding to both sides 
of an equation. It would be a sheer waste of money. ... A 
case like this, however, never occurs in the actual world." And 
why ? Because in the actual world money is always drifting to 
the nations whose industry and enterprise give it the highest 
utility, — to the nations whose mcreased productiveness and in- 
creased demand for money furnish a sphere of usefulness to the 
increase, — to the nations whose worth, honor and intelligence 



MORE MONEY, MORE PRODUCTION. 151 



make them the safest depositaries of the world's loose cash, 
and thus the centres of credit. England has raised her coin 
circulation to 150,000,000^., but her annual savings are between 
a hundred and a hundred and thirty millions. The vast quan- 
tities of the precious metals that flowed into Europe after the 
discovery of America, may well, in the absence of new enter- 
prises and industries to employ it, have had a different effect, 
and produced '* a dearness of all things without a dearth of 
anything." Europe — especially Spain — was industrially inert, 
incapable of safely absorbing so large a quantity of the precious 
metals, incapable of receiving the industrial impulse they would 
most naturally have imparted. The lack of stimulating in- 
fluence on a stagnant and stationary society is seen in India and 
China, which absorb every year $50,000,000 in silver, only to 
hoard it away. 

§ 148, The influx of money into a progressive country is one 
of the most powerful promoters and increasers of production. 
To money (as to labor) '^ time is money ;" whoever possesses 
it must seek an investment for it, or lose the profits ; when it is 
plenty, all sorts of productive work are stimulated ; labor is the 
master of capital, and industrial enterprise gains a more than 
proportionally larger return for its outlay, with every increase 
of the outlay. Labor becomes more productive as the instru- 
ment of association is more universally accessible. Its price rises 
while that of commodities falls. 

The drain of money away from a country does not make it — 
as some have said — " a good place to buy in but a bad place to 
sell in," — ^just the reverse. It makes it a bad place in which 
to buy anything but special products of its soil or climate, 
because although labor is cheap, the commodities produced by 
labor are dear through its inefficiency. It makes it, therefore, a 
good place for the sale of the merchandise of countries more 
happily situated. " To him that hath shall be given." Money 
tends to where money is ; start a shilling in circulation in Thibet 
ot Central Africa, and the chances are that it will turn up in 
London. It will do so, because the presence of great accumu- 



152 ELEMENTS OF POLITICAL ECONOMY. 

lations of capital in England, have made English labor produc- 
tive to a degree that outweighs all other considerations. 

§ 149. For the same reason, the money market in poor countries 
always tends towards stringency. However great may have been 
the recent supply, it is speedily drawn off into a thousand side 
channels, and the main stream is diminished. The effect of this 
is far more than proportional to the amount involved, for this 
market is extremely sensitive. On the first intimation of a 
scarcity, the rate rises, and they who must have money to pa^ the 
current expenses of large establishments, or to meet their out- 
standing obligations, are at the mercy of the lender. The cap- 
tains of industry, and, through them, their laborers, are no 
longer the masters but the servants of capital. 

§ 150. A second form of money, and one that is in many re- 
pects superior to coin, is paper-money. It is open to none of 
the objections that we have presented to the use of gold and 
silver. It wears out sooner, indeed, but can be replaced at a 
trifling cost ; its production withdraws no large portion of the 
race from productive industry; its use abstracts from the arts no 
substance of intrinsic value ; it circulates more rapidly than 
gold because it represents great values by a smaller bulk, and is 
easier of transfer. And when, as can be accomplished by wise 
legislation, the public have security that the note is really issued 
by the firm that it professes to come from, and that that firm is 
able to meet all just demands upon it, the last objection to its 
use is removed. If barter may be compared to the rude mode 
of transportation on human backs, and coin to transportation in 
carriages drawn by horses, paper-money is the steam-carriage, 
whose use calls for larger precautions against danger, but whose 
superior utility far outweighs that consideration. 

The earliest form of pliper-money was the bill of exchange. 
From a letter of Cicero to his brother Atticus, directing him to 
obtain a sum of money at Athens, we learn that this or some- 
thing equivalent to it existed in antiquity. It was reinvented 
in the Middle Ages, not by the Jews, but by the Caursins, « 
class of money-changers employed by the Papal See in the col- 



THE BILL OF EXCHANGE. 153 

lection and transmission of its revenue from all parts of Europe 
to Rome or Avignon. The Hanse towns adopted it, and it 
passed into currency as one of the ordinary methods of com- 
merce between distant traders. 

By this plan a debtor in Hamburg, who wishes to pay his 
London creditor, goes "on 'change" and buys of a discount 
house a draft on London for the amount. This draft has pre- 
viously been drawn by some Hamburg merchant upon his London 
debtor, and sold by him to the discount house for a trifle less 
than the market rate of exchange. This exchange is " in favor 
of Hamburg " when drafts on London are plenty and sell for a 
small percentage less than the " face value." It is " against 
Hamburg " when the reverse is the case ; and unless the course 
of exchange changes, some specie will in that case have to be 
exported from Hamburg to London to restore the balance. 
The amount of the discount or the premium on bills of exchange 
can never be greater than the cost of transmitting specie, in- 
cluding interest and insurance. By this method, it will be seen, 
the debts of London merchants to Hamburg merchants are paid 
by set-ofi" against the debts of Hamburg merchants to London 
merchants, and the amount of money exchanged between the 
two cities is reduced to a minimum. 

§ 15L The advantages of this plan are so great that the 
advantage of something like it for the transaction of business 
within each city was readily seen, and banks of deposit and 
issue were established as early as the fifteenth century. The 
first Italian banks, however, were mere associations of the public 
creditors in each city for the joint care of their interests, and 
when they became banks in the modern sense, they did not begin 
the issue of paper-money, but dealt only in money of account, 
which is yet to be described. The same is true of the banks of 
Amsterdam, Hamburg, and Stockholm. By 1673 we find the 
Bank of Genoa issuing bills of pretty large amount, which 
passed into circulation for wholesale transactions. About the 
same time the English goldsmiths began the practice of issuing 
bills which circulated in the same way, and when in 1694 the 



154 ELEMENTS OF POLITICAL ECONOMY. 

Bank of England, and in 1605 the Bank of Scotland, were 
established, the issue of these bank-notes to those who bor- 
rowed money was a feature of each institution. These were at 
first "time-notes" bearing a low rate of interest^ and conse- 
quently certain to be presented for redemption. Growing a little 
bolder, the Bank of England issued demand notes that bore no 
interest, and these passed rapidly into circulation, imparting a 
vigorous impulse to all sorts of business. As the country really 
needed these, it was almost impossible that any large quantity 
of them could be presented for redemption at once, except in 
cases of extraordinary panic. Of course the bank was enabled 
to extend its discounts far beyond the amount of coin at its 
command. For the bank did not — no bank could — keep on 
hand specie enough to redeem its entire circulation. It was 
sufficient if it kept as much as experience showed would meet 
the largest ordinary demand for it. 

Such was the genesis of the modern bank-note, which has 
been one of the most powerful agents to promote and fertilize 
industry. To establish a bank of issue in a community where 
none has existed before, is to coin the mutual credit and confi- 
dence of the people into available money. It is to bring men into 
closer and more helpful association, by furnishing a new supply 
of the instrument of association and of the exchange of ser- 
vices. It is to put the means of industrial activity into the 
hands of those captains of industry who will open avenues of 
useful employment to the idle and the dependent. It is to 
recall from distant banks, and to draw out of old stockings and 
cash-boxes, the accumulated sayings of the community, and 
make them doubly efficient in the promotion of local interests. 
By adding to the rapidity of societary circulation it adds new 
profits to every bargain, and gives a new efficiency to every blow 
on the anvil, a new value to the crops in every field. 

Sir Walter Scott says of the Scotch system of banks of issue : 
" The facilities which it has afi"orded to the industrious and 
enterprising agriculturist or manufacturer, as well as to the 
trustees of the public in executing national works, have con- 



HOW TO MAKE BANK-NOTES SAFE. 155 

verted Scotland from a poor, miserable and barren country into 
one where, if nature has done less, art and industry have done 
more than in perhaps any country in Europe, England not 
excepted. Through the means of credit which this system 
afforded, roads have been made, bridges built, and canals dug, 
opening up to reciprocal communication the most sequestered 
districts of the country; manufactures have been established, 
unequalled in extent or success, — wastes have been converted 
into productive farms, — the productions of the earth for human 
use have been multiplied twenty fold, while the wealth of 
the rich and the comforts of the poor have been extended in 
the same proportion. And all this in a country where the 
rigor of the climate and the sterility of the soil seemed united 
to set improvement at defiance. Let those who remember 
Scotland forty years since bear witness if I speak truth or false- 
hood." 

See "Malachi Malagrowther's" Letters on the Proposed Change in the 
Currency (Edinburgh, 1826). 

§ 152, The community, in using the notes of the bank as 
money, pass a vote of confidence in the general solvency. They 
are authorizing the directors to monetize a small portion of the 
capital of the neighborhood, that the utility of the rest and the 
facility of its transfer may be increased. They are passing, at 
the same time, a vote of confidence in the honesty and prudence 
of those directors. 

'' What security have we that the confidence thus extended 
will not be abused ?" Two : (1) government inspection should 
be continually exercised over every such institution, and should 
extend to all the details of its management. Of course this 
implies no publication of the bank's affairs, save when the re- 
sults are such as to justify its dissolution. 

(2) Under restrictions imposed by general laws, any number 
of citizens should be as much at liberty to establish a bank as 
to open a store to sell dry-goods. The profits of legitimate bank- 
ing are always large enough to attract thither capital suflficient to 
supply safely all the demand for paper-money and discounts. It 



156 ELEMENTS OF POLITICAL ECONOMY. 

is only when the business is made a monopoly, and confined to a 
small number of firms, that their limited capital is unequal to 
the demand for money made upon them by the community. 
The best guarantee for safety is freedom. 

The supposed danger that over-issues are practicable, and 
that they may not only bring the holder of bank-notes into a 
position of risk, but also derange the whole market for money, 
and with it all other markets, is in the main a mere bugbear. 
Banks do not break down because their note circulation is too 
large, but because the other departments of their business are 
so badly managed that their notes, be they few or many, have 
no guarantee behind them. A bank can ordinarily put into 
circulation no more notes than the community needs. The 
avenues of return are always more open to the public than those 
of issue to the directors. But one class of English economists 
have said "over-issue" so often that they are ready to stake 
their reputation as financiers upon this theory, which is sustained 
by no facts, and is disputed by the ablest men (Tooke, Ash- 
burton, Fullarton, etc.) of their own school. " It was a pair of 
spectacles which the Bullion Committee [of 1811] left as a 
legacy to .the subsequent generation, and which became the 
medium through which all our monetary difficulties were viewed. 
The increase of the bank's issues to the extent of a million or 
two above the ordinary amount, was held capable of producing 
the most momentous consequences. It ' depressed the currency,' 
and was the parent of our recurrent monetary crises. The up- 
holders of this theory, it is true, never demonstrated by a refer- 
ence to prices that the currency was depressed. They took 
that for granted, and a good deal more besides " (R. H. Patter- 
son). 

§ 153. The third and the most perfect form of money is 
money of account. It possesses in a still higher degree all the 
advantages that make paper-money better than coin. It passes 
in circulation most rapidly ; it performs the vastest amount of 
service in proportion to its amount; its use involves no loss by 
wear ; its production is so nearly costless that its cost hardly 



THE BANKS OF VENICE AND GENOA. 157 

enters into men's thoughts. As much as paper-money is less 
material than coin, by so much is money of account less material 
than paper-money. As we have compared coined money in its 
efficiency and utility to a carriage drawn by horses, and paper- 
money to the car moved by steam-power, so might we conceive 
of money of account as a vehicle of transportation through the 
air, moving with electric swiftness, and impelled by some of 
those subtler physical forces whose mastery is yet to be achieved. 
It is the money of civilization ; its use involves a degree of 
intelligent insight into the true nature of wealth and of ex- 
changes, and a strong confidence in the general honesty and 
trustworthiness of mankind, that are impossible to the savage or 
the half-civilized man. 

Money of account originated in the commercial cities of Italy, 
and its use was thence transferred to the great emporiums of 
Northern Europe — Amsterdam, Hamburg and Stockholm. The 
republics of Venice and of Genoa authorized their creditors to 
establish banks on the basis of the certificates of the city's debt. 
The Bank of Venice dates from 1171, when a forced loan was 
raised to fit out a fleet • that the burden might be felt as little 
as possible, the persons assessed were formed into a company for 
protection of their common concern and the receipt of interest; 
at the same time the debt was made easily transferable by order 
on the company, and thus its use for the discharge of obligations 
grew up naturally. At first it was a forced loan under special 
guarantees ; then a desirable investment ; then a means of pay- 
ment. The first eharactev of the deposits so entirely disappeared 
that government ceased to pay interest on the capital. Then to 
secure a uniform currency, it decreed that all wholesale transac- 
tions should be paid in the form of a transfer of bank stock, 
unless otherwise stipulated ; so that whoever had a box full of 
coins, gathered from the four quarters of the earth through the 
manifold channels of Venetian trade, took them to the bank to 
get credit upon its books according to their weight and fineness. 
The standard by which their value was estimated was called 
" money of account," to distinguish it from the various moneys 



158 ELEMENTS OF POLITICAL ECONOMY. 

that were translated into it. The government treated these 
masses of coin as payment for the privilege of a credit on the 
bank's book, and all idea of their repayment was lost sight of. 
Yet for four hundred years, or until the conquest of the city by 
Napoleon I., this money of account circulated freely, and was 
at a premium (or agio) in coin ; trade proceeded with a rapidity 
previously unknown j no Venetian ever raised his voice in com- 
plaint of an institution which was the pride of the city and the 
envy of Europe. When the French destroyed it, they found no 
funds to reward them. 

The Bank of Genoa originated in the same way, but differed 
in some details of management, such as the issue of bank-notes. 
The Bank of Stockholm owed its origin to the fact that copper 
was the only coin in circulation in Sweden, and it was therefore 
necessary to translate this into a more convenient form of money. 
Hamburg and Amsterdam, the Genoa and Veniqe of the North 
in the sixteenth century, were equally embarrassed by the various 
weights and standards of the coin that flowed into their cities, 
and established banks of deposit and transfer to translate these 
into " money of account;" here also wholesale transactions were 
required to be settled in the shape of transfer of bank credits. 
As neither were based on government debts, and neither loaned 
money, the expenses were defrayed by a slight charge to the 
customers of the bank. Both cities reaped immense advantages 
from the system, in the rapidity and ease with which money of 
account passed from one person to another in effecting ex- 
changes. The Bank of Amsterdam .failed in 1790, as it was 
found that the funds on which its credit rested had been in part 
abstracted by the Dutch government. That of Hamburg still 
exists. 

§ 154. A bank in the modern sense is more than any of 
these institutions was. It is a discount house, a firm for the 
issue of paper-money, a place for dejyosit of money, a clearing- 
house, and a branch of a larger clearing-house. It is the union 
of all the earlier features of such institutions, with the addition 
of others that grew out of the peculiar methods of modern 
business. 



FOUR FUNCTIONS OP A BANK. 159 

First, its discount business. A bank is an institution that 
deals in credits by buying up debts, — that may be said to turn 
debts into credits for a consideration called discount. Except in 
the retail trade, the larger part of modern business is transacted 
by means of ''mercantile paper." The buyer does not transfer 
the amount due to the seller in coin or bank-notes. He gives him 
a bill for the amount payable in (say) sixty or ninety days. 
The seller cannot afford to do without the money for so long a 
time. He wants to " turn over his capital " as fast as possible ; 
he would rather give up a percentage of his profits and get the 
money at ance. He takes it to bank to be discounted, after 
making himself responsible for its payment by endorsing it. 
If the directors are satisfied with the name of the endorser or 
of the drawer, or of both, they let him have the money, minus 
the interest for the time specified. When the time is up the 
drawer of the bill must pay it, or if he fail its endorser must. 

Second, its issue business. A whole or a part of the money 
advanced to the bank's customer may be needed in such shape 
as will circulate among all classes. If he be a contractor or a 
manufacturer he is dealing with people who keep no bank ac- 
count. He must, therefore, have moneywhich they can use, and 
this the bank gives him, either in its own notes, or in those of 
some other bank. In this way the banks put into circulation a 
much larger sum in notes than their whole paid-up capital would 
suflfice to redeem, and this with perfect safety to themselves 
and great benefit to the community. 

Third, its business as a clearing-house, which is the most 
important of its functions. In most cases a customer of the 
bank who has had a note discounted would find it very incon- 
venient to be paid in any form of money ; he prefers a credit 
to that amount on the books of the bank. That is, the bank 
advances him a sum of money, and he at once "deposits" it 
with the bank, and uses the credit thus obtained to pay his 
debts by check, i. «., by the transfer of a portion of this credit 
to the account of his creditors. A small percentage of checks 
are drawn in money by their holders, but in most cases they 



160 ELEMENTS OF POLITICAL ECONOMY. 

are paid simply by a transfer of credits. In this case the 
" deposits '' on the bank's books become virtually part of the 
currency, and constitute a vast fund of "money of account" 
for the discharge of indebtedness. These deposits far exceed in 
amount all other forms of money in circulation, and move with 
greater raj^dity and exhibit vaster utility in effecting exchanges. 
The deposit fund continually tends, indeed, to diminish in volume 
through the discounted notes maturing and being paid, as well 
as through the payment of depositors' checks; and it is only 
kept up through fresh deposits of cash or fresh discounts. When 
the demand for these discounts is not great, or the directors are 
hopeful and confident, the rate of discount falls. When the con- 
trary is the case, it rises and the best security is required. 

This is particularly noticeable in countries where there is no legal limit 
to the rate of interest, such as England. In the United States a bank 
usually charges uniformly the rate fixed by law. 

Fourth, to make the system more efficient and to give this 
money of account yet wider currency, each bank in our great 
cities is a branch of a larger clearing-house. When all the 
business of a city was done at a single bank, the transfer of its 
credits sufficed for all wholesale transactions. When several 
took the place of one, very large sums of money passed between 
them, as a check would not transfer credit unless both parties 
kept accounts at the same bank. But now each bank makes its 
statement in the clearing-house, of its claims against every other, 
and on balancing the account of each, the net indebtedness to 
(or from) it is ascertained, and paid from (or to) the clearing- 
house. These balances are the merest fraction of the gross 
amounts, and the system brings every bank, to a certain extent, 
under the supervision of the rest. 

This method of settlement was adopted by the dealers in the old 
French fairs, and enabled the merchants to transact a great deal of 
business with the exchange of very little money. 

The Scotch banks first adopted it for the mutjj^al supervision and con- 
trol of their circulation. They met once a fortnight in Edinburgh to ex- 
change notes, and paid the net balances in coin. 



CAUSE AND CHARACTER OF PANICS. 161 

§ 155. Note here that we must distinguish between the true 
character of money of account and the way in which it is mostly 
created in modern times. The method of buying and selling 
" on time " with which it is now associated is open to many ob- 
jections; but if that method were utterly abolished, if the dis- 
count system were to cease, and all purchases were to be paid in 
cash, such a currency as this would be as necessary as ever for 
the transaction of business. The credit-fund would then have 
to be created entirely, as it now is in part, by the actual deposit 
of money in some institution like the Bank of Hamburg. Its 
volume would then be no longer liable to contraction or ex- 
pansion with the hopefulness or distrust of bank directors. 
Were a money of account based not on deposits of cash, but 
on deposits of securities to a fixed amount, as in Venice, it would 
retain its power of circulation, with no reduction of its volume, 
in the worst seasons of panic, and would be continually available 
for the transaction of legitimate business. The possession of 
such a ^' money of account" was the secret of the mercantile 
stability of Venice and Genoa, Hamburg and Amsterdam ; as 
the complication of our " money of account'' with the discount 
system is a chief cause of our commercial fluctuations. 

^ 156. No market is so sensitive as the money market. A 
very slight reduction in the supply raises the price out of all 
proportion, and leads to a rigid scrutiny of all securities offered 
as the ground of a loan. The banks at such a period are sensi- 
tive to the approaching stringency ; they refuse discounts that 
they would else have granted ; they refuse new paper, and put 
an artificial dam across the great stream of credit-payments, to 
the ruin of those who must go on and who must have money. 
In the fright that follows, as in all frights, men lose their wits ; 
the business community is demoralized. Credit, faith in any- 
body, in anything but visible and tangible money, disappears. 
There is a general falling back upon the more primitive and 
material methods of payment. The great credit-fund of money 
of account loses its currency, or hold upon public confidence, 
because created by discounts and bound up with the uncertain 
11 



162 ELEMENTS OF POLITICAL EOOXOMY. 

fortunes of the discounting banks. Then begins a *' run upon 
the deposits." Those deposits were in great part created by 
credits granted, and were never intended to be paid in money 
of any sort. The banks sho'.ld have the option of paying 
them in legal tender, or in certificates of deposit, good at the 
clearing-house; but they have none. They are demanded 
in visible and current money. In spite of the reduction of dis- 
counts, their amount is still too great to be thus disposed of, 
and a suspension of the banks necessarily follows, upon which 
the panic reaches its height. All exchange of services, except 
the most necessary, ceases at once ; the community relapses into 
the barbarism of mutual distrust. The history of bankings 
since the establishment of the discount system, shows us the 
necessity of such a reform as will sunder that system from bank- 
ing proper, and secure the permanent currency and the free crea- 
tion (under proper safeguards) of money of account. 

No bank existed in England till 1694. During Common- 
wealth times the London goldsmiths, whose fire- proof and thief-: 
proof vaults rendered them the natural custodians of large sums 
of money, began to exercise some of the functions of modern 
banking. They granted loans at high rates of interest, and is- 
sued these in demand-notes. A little experience showed them 
how much specie they must keep on hand to meet the possible 
demand for it on any one day. They paid depositors six per 
cent, interest for it. This continued till after the Revolution. 

§ 157. It occurred to William Paterson, member of the Scotch 
Parliament from Dumfries, that government could raise money 
for the war against France without paying the high rate of in- 
terest exacted by the goldsmiths. He saw that a far larger sum 
than they could command would be obtained, if the government 
could give confidence to the multitudes who were hoarding small 
sums, and make it worth their while to lend them. He pro- 
posed a Bank of England,. after the model of those of Italy and 
Holland, — i. e., for the issue of circulatiog paper-money, secured 
by the deposit of what we call government securities. After 
much opposition, the plan was adopted with some modifications, 



THE BANK OF ENGLAND. 163 

and the Bank of England began its career January 1st 1694 
by lending its whole paid-up capital of £1,200,000 to the gov- 
ernment at 8 per cent, interest. At jBrst its notes were gladly 
taken in exchange for the light and defective silver currency of 
that day ; but when the new coinage that was carried through 
under Sir Isaac Newton came upon the market, the notes de- 
clined in favor, although they bore interest and were much 
needed for the business of the country. In 1096 their redemp- 
tion in specie was suspended. The Tory party, mostly country 
gentlemen, attempted to establish a land-bank as a rival. It 
also was to loan money to the government and to discount bills 
only on the credit of real estate. The plan failed utterly and 
caused great loss to the nation. 

The Bank of England grew slowly into favor, and lost its bit- 
terest enemies as the old race of usurers died out and none filled 
their places. It gradually perfected its methods; it established 
the system of book credits, with payments by check. It substitu- 
ted demand-notes bearing no interest for time-notes that bore 
interest; these new notes passed quickly into the circulation, and 
were rarely returned for redemption. It issued smaller and 
therefore more useful notes, the first being never less than £20. 
It secured in 1706 a virtual monopoly, not more than six per- 
sons being allowed to unite their capital to establish any other 
bank in England. (This lasted 120 years, and was then confined 
to London and towns within 65 miles of it.) On the other 
hand it upheld the public credit, and greatly simplified ques- 
tions of finance, by furnishing a channel through which the 
people could easily come to the support of the government in 
time of need, and could always obtain either a profitable invest- 
ment for capital or a loan of money on easy terms. The rate of 
discount down to 1844 varied between 4 and 5 per cent,, 
save a rise to 5J and 6 in the last half of 1839. Other bank^ 
ing houses grew up in London and throughout the country, but 
all subordinate to the great national concern in London. 

§ 158. As a state bank it shared in the vicissitudes of the 
government. It had to stand a run on its specie in 1745, wheu 



164 ELEMENTS OF POLITICAL ECONOMY. 

the Pretender was on his way to London, but the city merchants 
stopped this by publicly pledging themselves to stand by the 
bank. In 1772 and 1783 panics were caused by " over-trad- 
ins" in foreign goods ; in the latter the bank for the first time 
adopted the policy of cutting down its discounts, till the drain of 
specie from the country should cease, — an effectual but rather 
*' heroic" remedy, as every reduction of the circulation intensi- 
fies the panic. 

la. iFf93 and 1797 panics recurred ; that of 1793 caused partly 
by ovtY-trading, partly by the political disturbances of the time; 
that of 1797 entirely by the latter. In both cases the bank made 
bad worse, by refusing discounts and thus allowing wealthy and 
solvent firms to go down unaided. Happily the government re- 
stored confidence by an issue of exchequer notes. In 1810 the 
revolt of the Spanish-American colonies led to immense over- 
trading and a consequent panic. Cargoes of skates had beeu 
sent to cities where ice and snow were never seen, and others 
had received Epsom salts enough to physic their entire popula- 
tion once a week for fifty years. The bank having suspended 
specie payments since 1797, came to the aid of solvent firms 
with large amounts of notes, and the government ordered an 
issue of £6,000,000 besides. 

§ 159. In 1815 the bank began to get ready for a resumption 
of specie payments by cutting down discounts and reducing cir- 
culation. It thus reduced the currency by £12,000,000, a mere 
trifle as compared with the money value of the nation's pro- 
perty ; but the whole circulation for a time stopped and an arti- 
ficial panic was produced. In 1821 it resumed specie payments, 
after a suspension of twenty-four years, thus altering at once and 
greatly the terms of all contracts made in the interval and not 
yet executed. All who had land, labor or produce to sell, or 
contracts to fill, were placed at great disadvantage. Creditors — 
i. e., the wealthy, capital-holding class — gained greatly, except 
where their debtors were absolutely ruined? Mills stopped, land 
fell in price, labor was thrown idle, and in peace men suffered 
niore than the calamities of war. 



peel's bank bill. 165 

In 1825, 1837 and 1839 panics similar to that of 1793 
occurred — i. e., they were caused by over-trading and intensified 
by the selfish policy of the bank. In 1840 a parliamentary 
commission began to investigate the reasons of these crises, and 
in 1844 Sir Robert Peel's famous " Bank Act " V7as passed, with 
a view to prevent their recurrence. Rejecting the opinion of 
Adam Smith — that if bank-notes be issued only on the discount 
of merchantable bills of undoubted character, and founded on a 
real transaction-, they cannot be excessive, — English fir ciers 
had adopted the theory of over-issues as explaining the A^nole 
matter. That theory grew very naturally out of their mechanical 
theory of the efi'ect of an increased supply of money (§ 146). 

§ 160. The Act of 1844 was directed to the regulation of the 
English currency through the Bank of England, to prevent a 
fancied " depreciation." It severed the banking department 
proper from the department of issues, and transferred to the 
latter £14,000,000 in government obligations as security for bank- 
notes of that amount. It required that, if the note circulation 
exceeded that sum, the bank should have gold in its vaults equal 
to the excess. At the same time it provided that the bank-note 
circulation of the country banks should be limited and diminished, 
never increased. In other words, it made the amount of paper- 
money in circulation in England dependent upon the amount of 
bullion in the vaults of the banks. 

The measure betrayed a total want of apprehension of the true 
nature of the discount and deposit system. It did not put the 
vast currency created by the bank's advances and those of its 
rivals, under any specific limitations. It allowed the bankers to 
create currency ad libitum on the pages of their ledgers, pro- 
vided they did not print it on bits of silk paper that passed from 
hand to hand. In ordinary business times it could therefore put 
no restraint upon the real circulation of the country. Rather it 
set before the bank the strongest inducement to multiply that 
currency and stimulate speculation when money was easy, that 
it might "make hay while the sun shone" and get its super- 
fluous issues into circulation. Heretofore the rate of discount 



166 ELEMENTS OF POLITICAL ECONOMY. 

had ranged between 4 and 5 ; from this date the extremes are 
2 and 10. The office of a regulator is to moderate extremes ; 
but the bank has really intensified and exaggerated them. 
And when we speak of the Bank of England, it must be re- 
membered that it controls all the lesser banks. By its im- 
mense size, its vast prestige, its special privileges, it is able to 
fix the rate to be paid for money throughout the kingdom. 

But in other than ordinary times, when this great credit-fund 
losef it:s currency, when the business community is demoralized 
by panic, and the demand for other and more tangible forms of 
money recurs, the act becomes at once powerful for mischief. In 
such a case the actual supply of notes and specie is manifestly 
unequal to the vast demand made upon it by the business of a 
great nation ; and not only the Bank of England, but all the 
banks of the country are hand-tied so far as regards any help 
they can give. Their notes may be as good as gold. Since 
1823 they have always been so. But they can issue none until 
the government step in and put an end to the panic by sus- 
pending the act which was meant to prevent panics. 

All these objections were very ably presented before the act was passed, 
by Lord Ashburton (head of the house of Baring Bros.), T. Tooke, 
(author of the History of Prices), John Fullarton {On the Regulation of 
the Currency), Charles Scott (a Montreal banker), and others; but to no 
purpose. The " sound views on currency " represented by Peel, Lord 
Overstone (Mr. Jones Lloyd), Torrens, McCulloch, &c., carried the day. 

Worse still, the act conduces to purely artificial panics. The 
causes that lead to the diminution of bullion in the bank vaults 
are various, and most, or indeed all of them, are without any signi- 
ficance as to the general soundness of the English money market. 
If a large amount of foreign stocks or government bonds have 
been subscribed for, gold must go out to pay for them. If 
schemes of improvement in India are on foot, English gold must 
buy on the Continent the silver that is to pay the Hindoo work- 
men. If any country has sold as much as usual to England, but 
has bought less than usual, specie must be exported to pay the 
balance, since bills of exchange are not to be had. If a failure 



a PUTTING ON THE BANK SCREW." 167 

of the English graia crop necessitates a larger import than usual 
of Russian or American wheat, Mark Lane must pay for it partly 
in gold, unless the exports to Russia or America be unusually 
great. Any one of these causes or a concurrence of several will 
diminish the bullion in bank. Were there no Act of 18-i4, and 
were the directors wise by past experience, the decrease would 
not matter. It might be treated as a petty backset, that the 
course of trade would speedily compensate for. 

But as ii is, the bank raises the rate and diminishes the 
amount of discounts as the bullion diminishes, in order to keep 
the circulation down to the level of the bullion, instead of 
taking any steps directly to replace the loss. It does not go to 
the Continent to buy or borrow bullion ; it throws the whole 
pressure of the distress upon the business men of the nation. 
Holders of stocks of domestic and even of foreign goods, who 
are in want of money, must throw them on the market at any sacri- 
fice, and sell them at a bargain to some rich capitalist at home or on 
the Continent who is on the outlook for such chances. English 
stocks and foreign stocks held in England are sometimes sacrificed 
to an extent that exceeds the maximum of bullion in the batik 
vaults. la this way a purely artificial drain of specie home- 
ward is produced, and the bank is satisfied. In the meantime 
great establishments have broken down under the pressure, a 
few because they ought to break, others in spite of their com- 
plete solvency. In many cases, after the affairs of such houses 
have been wound up by the costly processes of an English 
bankruptcy, — which absorbs 45 per cent, of the estate, — every 
creditor has been paid in full, and a handsome fortune left to 
the partners. 

§ 16L Three years after Peel's Bank Act was passed came 
the crisis of 1847, occasioned partly by the drain of gold to 
buy food abroad because of the failure of the potato crop, partly 
by the great railway speculations of that period. The Bank Act 
failed in its purpose, as even its author confessed ; the govern- 
ment suspended its operations to allow the bank to come to the 
assistance of business men. The same took place in the great 



168 ELEMENTS OF POLITICAL ECONOMY. 

crises of 1857 and 1866, and in a less degree in 1874. In 
1857 mercantile extravagance was not rife in England j business 
was quiet and moderate as compared with 1852, when the bank 
stimulated speculation to the utmost by lowering the rate to 
two per cent. But Peel's Act necessitates a crisis in England 
whenever any of England's customers are in trouble. The 
American crisis caused a drain of specie from Europe to the 
United States, and all England was put " under the bank'" 
screw '' to turn the tide of gold back to England ; prices were 
forced down twenty-jSve per cent., and large amounts of the pro- 
ducts of industry passed out of the hands of their rightful owners 
into those of capitalists who could take advantage of their ne- 
cessities. Every crisis takes from the poorer and more active to 
give to the richer and idler classes, and adds to the inequality 
of wealth that is so ominous a sign for the future of England. 
It destroys also a part of the moral capital of the nation, — the 
confidence and hopefulness of its captains of industry. 

England possesses, therefore, a highly artificial banking system, 
one which is nominally armed with great powers to protect the 
industrial interests of the nation, but certain, if rigidly ad- 
hered to, to use them to oppress and injure those interests. 

§ 162. In Scotland, on the other hand, we find an eminently 
natural banking system, created not /or the people, but i^them, 
acting down to 1845 with the most perfect freedom in the exten- 
sion of its operations, the increase of its credits and the amount 
of its circulation. And the safety has been exactly proportional 
to the freedom. Scottish bank-notes have been at par; the 
people will take guineas instead, if they must, but they pass 
them off as soon as possible as a pretentious, unthrifty, eminently 
un-Scottish kind of money, much inferior to a native bank-note 
issued in any corner of Scotland. 

The business men of Edinburgh, having heard that their coun- 
tryman (Paterson) was planning a bank for the English, and 
that he had been successful in obtaining a hearing, asked an 
Englishman named Holland to devise a Bank of Scotland. He 
did sOj and put his proposals before them. They knew nothing 



THE SCOTCH METHOD OF BANKING. 169 

of banking, but were willing to learn. They abounded in objec- 
tions, but saw the point of his answers. And so, in 1695, the 
new institution was launched, under a charter granted by the 
Scottish Parliament, being the first private joint-stock bank that 
the world had ever seen. It had a monopoly for twenty-one 
years ; its profits were very large, and the benefits that it 
conferred on an impoverished country were immense. Other 
companies came into existence, and the jealousies were extreme ; 
every bank was eager to break the rest, or at least injure their 
credit. In 1752 better counsels prevailed. Legislation was had 
to put an end to some abuses, including the practice of refusing 
payment of notes till six months after demand, and the issue of 
very small currency. The banks associated closely in a sort of 
national clearing-house, for mutual protection and mutual sur- 
veillance. The bi-weekly exchange of claims in Edinburgh was 
adopted, serving as a powerful check upon unsafe business. No- 
where in the world has an extensive banking system been carried 
on with so little loss to the public, and no country has derived 
so much benefit from banking. 

The distinguishing feature of the Scottish banks is their 
system of cash credits. Whoever can get two satisfactory 
bailsmen to endorse his bond, can open an account for its amount 
in the bank. He is charged four per cent, on the amount that 
he actually draws, and is allowed two per cent, on sums deposited 
when the bank is in his debt; that is, after every day's transac- 
tions his account is balanced and he is paid interest at the lower 
rate or pays it at the higher rate, — according as he is the bank's 
creditor or its debtor — till the next transaction alters the balance. 
But the payments are mostly in notes, and not by check ; paper 
money, therefore, plays a large part in Scotch banking, as notes 
constitute almost the entire currency of the kingdom. They are 
not aristocratic notes like those of England, of £5 and upward, 
but very largely £1 notes for the use of the people. It is to 
exchange these notes and pay their balances in coin that the 
banks meet twice a week, and thus they are enabled to form an 
estimate of the extent and safety of the business of each. In 



170 ELEMENTS OF POLITICAL ECONOMY. 

1826 the English ministry proposed, "for the sake of uniformity,' 
to abolish this useful and popular currency; but the proposal was 
received with such an outburst of opposition from all classes and 
parties (Sir Walter Scott took a very prominent part), that it was 
abandoned. In 1845 all further increase in the amount of this 
paper-money was forbidden — i. e., it was enacted that, however 
great Scotland's need for more money in the course of her growth, 
she should have no more. She has now actually less, as the failure 
of a Glasgow bank has caused the lapse of several hundred thou- 
sand pounds. In times of panic these cautious Scotchmen 
exercise the higher caution of mutual help. In the run on the 
Union Bank of Edinburgh in 1857, there was in Bank street a 
double flow of gold — frightened depositors carrying away their 
money to other banks, and bank clerks carrying it back again. 
The results fully justify this confidence; for over a century the 
public have lost nothing by the banks and the banks have lost 
nothing by the public. Stockholders have lost in a very few 
instances through dishonest or silly management. 

§ 163. The first Bank of France was established in 1716, 
when the country was bankrupt, business suspended, and the 
misery of the people at its height. In two years it had revived 
trade of every kind and restored the public credit. Unfortu- 
nately its projector and manager, a Scotchman named John Law, 
held the theory that a country could not have too much money, 
and that it could safely have and usefully employ as much as 
the entire value of its property. Sustained in his schemes by 
the Regent, he extended the circulation to four thousand millions 
of dollars, bought up the royal revenues, the colonies and the 
entire foreign trade of France, and went into immense specula- 
tions in trade. To keep up the value of his notes, false divi- 
dends were declared, and specie was forbidden to pass as money 
except in small amounts. Of course th'^ attempt utterly failed, 
and the bubble bursfc, leaving France in a worse plight than 
before. 

In 1776 another bank was started, but not under that name, 
as France was afraid of banks. This one shared in the great 



BANK OF FRA"^"CE. — LAND BANKS. 171 

struggle carried on by Turgot and Necker, to redeem the public 
credit — and in the failure of the struggle. It came to an end 
with the Revolution, and was succeeded by a joint-stock bank, 
established by the Parisian bankers. 

The present Bank of France was founded by Napoleon in 
1800; it was given a complete monopoly of banking — a state of 
things that has been again restored through the provincial banks 
being united to it. Throughout its history it has been charac- 
terized by public spirit and a generous policy. Thus it did its 
utmost to carry French commerce through the exciting times 
of 1848 without reducing its discounts ; and when the govern- 
ment authorized it to suspend specie payments, it really never 
did so. It has repeatedly raised bullion by loan or purchase to 
meet a drain, instead of making the business community meet 
the emergency for it. Since 1857 it has adopted the principle 
of raising the rate of discount in stormy times, but apparently 
it does not materially decrease the amount. For this reason all 
sorts of disasters are predicted for it by English authorities on 
jBnance. France suffers less from commercial crises than Eng- 
land or America, because less engaged in foreign trade or indeed 
in wholesale operations of any sort. Her currency is mainly 
specie, and the extent of the credit system in proportion to her 
population and wealth is very small. 

§ 164. In France, Belgium, Germany and Russia, the pro- 
blem of establishing banks on the credit of real estate has been 
successfully solved, and these banks are now very widely estab- 
lished to grant discounts to landowners and thus promote agri- 
cultural improvement. The great difficulty and expense of 
proving land-titles, and of legally recovering money loaned on 
land, seemed to condemn this class to pay high rates of interest. 
In Scotland, however, there is a very simple system of land- 
registry, and recovery of debts is a cheap and easy process. 
The Scotch banks, by their cash credits secured by bond, have 
solved the problem for their agricultural customers. The land- 
owners of Silesia, finding themselves utterly impoverished by 
the wars of Frederick the Great, adopted a scheme proposed 



172 ELEMENTS OF POLITICAL ECONOMY. 

to them by a Berlin merchant, named Biiring. They unitedly 
pledged the whole land of the province to the government, 
which raised money on its own credit as if for a public loan, 
and lent it to the association at the rate it paid for it. This 
loan is put on the market in the form of land-stock, guaranteed 
by the government and transferable at pleasure. Besides this 
public association, private ones have been formed in great 
numbers, and have done much to improve the agriculture of the 
Continent. These private land-credit banks take mortgages 
bearing a fixed rate of interest upon landed property, paying for 
those mortgages not in money, but in their own obligations bear- 
ing a lower rate of interest, which obligations the mortgagor 
sells, mainly to small local capitalists. 

§ 165. Although proposals were very early made for the 
establishment of joint-stock banks of issue in the American 
colonies (especially in Boston and in Philadelphia), land bank- 
ing was the first that was adopted. The colonial governments' 
land offices made loans in paper-money " on bond and mortgage " 
at low rates of interest, thus furnishing a circulation for local 
trade and helping the settler to reclaim his land. The deprecia- 
tion of public credit by the vast issues of paper-money during 
the Revolutionary War put an end to the practice. But these 
colonial issues did not stand at par; they ranked differently in 
difi"erent colonies, and so gave rise to that curious complication 
by which a pound meant one thing on the right bank of the 
Delaware, another on the left, but a pound sterling in neither case. 

§ 166. Robert Morris, a merchant of Philadelphia, was much 
struck with the need of a public bank to facilitate the business 
of the colony, and was about to ask a charter for one when the 
Revolution put a stop to his plans. Being the Superintendent 
of Finances during the closing years of the war, he had great 
difficulty in raising loans, and proposed to the Continental 
Congress his plan for a bank. It was formally approved, a 
charter secured from the State legislature, and the Bank of 
North America went into operation January 1782. The national 
For some account of a system by which the advantages of the credit 
system have been extended even to the working classes, see § 140. 



BANK OF THE UNITED STATES. 173 

government took a quarter of a million in stock, and borrowed 
$400,000 from the bank. It did much to restore public credit and 
stimulate industry; it gradually became independent of govern- 
ment, while still rendering needed aid. In 1785 its charter was 
withdrawn by the state legislature by the votes of the country 
members, who wished to see the state's credit restored and the 
land offices reopened, — and who thought the bank was in the 
way. It continued operations without a charter, and was re- 
chartered in 1787, the farmers having found out their mistake. 

Banks were soon after established in Boston, New York and 
Baltimore. 

§ 167. The old Bank of the United States was chartered by 
the U. S. Congress in 1791, on the recommendation of Alexander 
Hamilton, whose report on the subject is a masterly state paper. 
When the charter had expired in 1811, the party of strict cone 
struction — i. e., those who believed in giving the general govern- 
ment as little power as possible — were in possession of power 
and refused to renew the charter. The local banks chartered by 
the states alone remained, with capital by no means equal to the 
demands upon them. Great expansions were followed by sudden 
contractions of the currency, the banks always "protecting 
themselves " at the expense of their customers by sudden re- 
trenchment of circulation, rather than sacrifice any part of the 
large amount of government stocks that they held. Well might 
Matthew Carey protest, " that abstracted from all attention to 
the interests of the community, it is supereminently absurd, 
impolitic, and injurious, as it regards the interests merely of the 
banks, to press citizens into the vortex of bankruptcy ;" and 
" that those sudden vibrations of bank accommodation whereby 
money is rendered superabundant at one time and immoderately 
scarce at another, are favorable to speculation and the wealthy 
alone, — and are pernicious to morals, industry, trade and com- 
merce, — that they tend to enrich the wealthy and impoverish 
those who stand in the middle and lower walks of life, — in a 
word, to make the rich richer and the poor poorer.'* 

Letters to the Directors of the Banks of Philadelphia (1816). 



174 ELEMENTS OF POLITICAL ECONOMY. 

§ 168. The second U. S. Bank was chartered in 1816, a 
charter granted two years previously having been defeated by 
the veto of President Madison. Its earlier years covered a period 
of great financial prostration (1816-24); its later period was 
one of great inflation and general speculation (1833-6) ; the 
nine years between were marked by a sober and steady growth 
in all the elements of national prosperity. The history of the 
bank and its national influence has been the subject of bitter 
and protracted controversy. We incline to the view that it 
rendered the nation great services in helping it out of the time 
of distress, and was in no wise responsible for the inflation and 
reckless trading that culminated in the crisis of 1837-8. It 
furnished a national currency that passed current in every part 
of the Union, at a time when the complexity of a score of 
difi'ereut banking systems, and the existence of numbers of 
fraudulent banks, prevented the notes of any other bank from 
possessing more than a local circulation. It raised the public 
credit by accepting public bonds as subscriptions for bank stock. 
It evinced the solidity of its monetary basis by sustaining for 
years the attacks of a powerful political faction, headed by 
President Jackson. When at last it failed to obtain a renewal of 
its charter, and thus ceased to be a national and became a state 
bank, it was at the same time greatly weakened both in actual 
resources and in public confidence by the withdrawal of the 
government deposits. It engaged in speculations, and the failure 
of these, joined to the hostility of the then dominant political 
party, involved its ruin, but it cannot be held to have verified 
the prophecies of its enemies. 

§ 169. From 1836 till the opening years of the recent Civil 
War, we had no National Banking system. Every state legis- 
lated according to its light, and hardly one of these state laws 
evinces any intimate knowledge of the workings of the credit 
system. Some had the wisdom to leave their people free to en- 
^SLge in banking to any extent they pleased, under general re- 
strictions for the defence of the public who held bank-notes, — 
as in Scotland. Others .by artificial restrictions kept capital out 



STATE BANKING LAWS. 175 

of banking, and thus prevented the business community from 
getting the amount of accommodation they needed. Thus 
Rhode Island, under a free system, had seventy-one banks, or 
one for every 2000 of its popuhition, with an aggregate capital 
of nearly ^15,000,000, and investments and loans of $19,500,000. 
Pennsylvania in 1850, under a restrictive system, had but fifty- 
three banks, or one to every 40,000 of its people, with a capital 
of $20,500,000, and loans and investments of over $50,000,000. 
Rhode Island had $100 a head invested in banking; Pennsyl- 
vania $8. The legislators who established this state of things, 
and conferred the monopoly of banking on a few favored estab- 
lishments, thought they had provided for all risks by limiting 
the number of bank-notes, and requiring the banks to keep a 
fair proportion of specie on hand for their redemption. They 
did not see that they had left it in the power of the directors to 
create another species of currency without any limit except 
ordinary prudence, and yielding large returns for the loan of 
the bank's credit. If they saw a huge mass of " deposits " set 
over against a somewhat larger mass of '' loans and investments " 
in the published reports, they probably counted it a sign of the 
high confidence that the bank enjoyed ; they never thought of 
those deposits as a far more volatile and explosive form of cur- 
rency, not issued in engraved notes, but created by a few strokes 
of the pen on the credit side of a bank-account. By limiting 
the capital invested, they had only furnished the chance and 
increased the temptation to excessive discounts, such as the 
actual figures show. Nay, they rather forced the banks to go 
beyond the bounds of prudence by subjecting them to an intense 
pressure on the part of the business community, which would 
otherwise have been distributed over a large number of estab- 
lishments with a great aggregate capital. For the profits of safe 
banking are always large enough to attract thither as much 
capital as the business community needs, when the right to 
establish a bank is restricted only by such general laws as are 
necessary to protect the public. 

§ 170, The banks of our three great seaports rendered very 



176 ELEMENTS OF POLITICAL ECONOMY. 

effective service to the government during the opening years of 
the war, j&lling the empty treasury by a large loan of specie, and 
upholding the national credit. 

The National Banking system which has grown out of Secretary 
Chase's financial operations, and now includes all the banks of 
issue in the country, recalls many of the features of early banking. 
Like the Italian banks, and the Bank of England in its first 
stage, the notes are secured by the deposit of government securi- 
ties, but with the additional guarantee that the national credit is 
fully pledged for their redemption. The banks have a double 
source of profit; they receive the interest on the government 
bonds, and have besides the profits of their discounts. They are 
of course subjected to the closest examination as to the state and 
manag-ement of their affairs. Those who remember the state of 
the currency before the war, or have ever looked into an old 
Counterfeit Detector, will be forced to confess that this national 
currency has great advantages. 

The valid objections to the system are two : (1) The laws to 
establish and regulate it are based upon a very imperfect notio'n 
of the credit system, and of the nature and extent of the credit 
employed by the bank in business. Like the old state laws, 
they take great pains to " hedge in the cuckoo " by limiting the 
issues of notes. They do not provide for the grouping of the 
banks in local clearing-houses for mutual supervision. They do 
nothing to keep the banks from " protecting themselves " in 
stringent times at the cost of the business community at large. 

(2) The distribution of these banks was an artificial one, and 
was becoming more and more so with every year. In the original 
assignment the amount of their aggregate issues was fixed at 
a given amount and distributed among the states accord- 
ing to population. Several of the poorer states were unable to 
make use at once of all the amount thus assigned to them, and 
after a given date it was distributed among the older and richer 
states. Connecticut, Rhode Island and Massachusetts, for in- 
stance, got very much more than their share, the Western States 
very much less. With every year these poorer states were 



DEFECTS OF OUR BANKING SYSTEM. 177 

growing in wealth and in the need for money, at a rate that sur- 
passed the progress of the older states. With every year the 
preponderance of numbers and wealth shifted farther westward. 
But the new states were tied to just the amount of circulation that 
they could put upon the market at that date ; and this, although 
they needed far more bank-notes in proportion to the extent of 
their business than the older states did, as with them the credit 
system is far less perfectly organized. Hence their outcry for 
more money, and their opposition to the measures taken to re- 
duce the amount of national currency in circulation, unless it 
were replaced by some other form of paper-money. So far as this 
defect can be obviated without changing the basis of our bank- 
ing system, it has been, by recent legislation. 

(3) In spite of their bearing the name " national," our banks 
are confined to very limited localities in the transaction of busi- 
ness. A vast amount of money is paid in transactions between 
distant parts of the nation by the cumbrous and expensive 
method of drawing and negotiating bills of exchange. The 
sales of the Western crops and the purchase of Eastern goods 
in exchange are actually carried on as if they were transactions 
between the merchants of two different nations, and sometimes at 
an expense of several per cent, premium or discount to business 
men. While our present system offers the advantage that the 
national currency passes freely through the whole nation, and 
keeps the rate of discount down, its incompleteness leaves 
great openings for illegitimate business in drawing speculative 
bills of exchange based on no real transaction, but negotiated by 
collusion between distant banks or firms. 

A national clearing-house established by government, with 
branches in every important city, and an understanding with all 
the national banks, would cheapen, simplify and add security to 
all our domestic trade. As local clearing-houses enable the 
banks to keep watch upon one another, so would this system 
bring the collective banks of each locality under the supervision 
of the banks of other places. The amount of money needed for 
the whole business of the nation would be greatly reduced. The 
12 



178 ELEMENTS OF POLITICAL ECONOMY. 

balance due to (or from) any city from (or to) all the rest, could 
be ascertained at a central office and then paid from (or to) that 
office. There might also be lodged in this national clearing-house, 
as in the Bank of England, '^ the power to meet panics by tempo- 
rary expansion," which " must be a power capable of being used 
promptly and with decision" (7%e Nation). Of course this in- 
stitution would be debarred from all trading in money or com- 
modities, and would be allowed to charge a small j9er centum or 
rather per mille to pay expenses. 

(4) The laws which regulate these banks unhappily tend to 
accelerate rather than to retard the centralizing tendencies of 
the national money-market, — the tendency to gather the great 
mass of the nation's capital into one great monetary centre. 
Money flows naturally to the places where it is most abundant, 
just as water tends to run down hill; but as it is often the 
chief problem in hydraulics to overcome that natural law, so 
also is it a chief problem of national economy to bring the 
power of capital to bear upon the less developed and less 
wealthy districts of the country. 



CHAPTER NINTH. 
National Economy of Finance and Taxation. 

§ 17L The differentiation of function that accompanies the 
progress of society renders necessary the existence of a body of 
paid oflScials to carry on the government (including police and 
military forces), and numerous other expenditures. In the earli- 
est time the head of the family — the chief of the tribe — the 
lord of the manor — bore rule within limited areas without re- 
ceiving fee or salary. He was the lawgiver, the law-ward (lord), 
the executor of the law, by reason of his position as chief pro- 
prietor or as head of the kindred. But in the growth of nation- 
alities a great step was effected when the king's judges rode 
circuit through the whole realm, with cognisance of all or nearly 
all causes, and when the king's shire-reeve (sheriff) took the 
place of the feudal and hereditary count at the head of the 
county. It was felt that there was a great gain in the increased 
responsibility and in the fairness of professional judges, though 
the new system was far more expensive. The remnants of the 
old system that exist to this day in England in the unpaid jus- 
tices of the peace, chosen. from the gentry and clergy, is felt by 
the common people to be a great burden. It gives the power 
and the interpretation of the laws into the hands of men who 
are swayed by the prejudices of a class. "Justices' justice" is 
a proverbially poor sort, and one of the chief demands of the 
working classes in the agricultural shires is: " Grive us stipen- 
diary magistrates !" So in Ireland, the " assistant barristers " — 
professional judges supreme on the local bench, though bearing 
a very modest name — are found to be the mainstay of the poorei 
classes in all matters of the interpretation of the law. 

§ 172. As in the enactment, interpretation and administra- 
tion of the laws, so in the enforcement of civil order and the 
national defence, — every class of transactions is a source of ex- 
pense. The soldier and the policeman discharge duties that 

179 



180 ELEMENTS OF POLITICAL ECONOMY. 

were once incumbent upon every male citizen ; they set the citi- 
zen free to employ himself as he will, and he must pay for the 
Release. And if the state interprets its vocation as extending to 
the sanitary and intellectual welfare of the people, the expense 
involved becomes still greater. It must take measures itself, or 
require municipalities to take measures, to keep its cities in such 
a state of cleanliness as shall bring up the average health of the 
people to a high standard. It must establish public schools and 
colleges, and training schools for teachers, that the rising gene- 
ration may not grow up in ignorance. It must set up post- 
offices, to promote easy intercourse between the different parts 
of the nation. If it regard religious knowledge as essential to 
good citizenship, it may endow a clergy devoted to diffusing it. 
In these and a thousand other ways it comes to pass that a civi- 
lized nation is obliged to pay for the advantages of a free gov- 
ernment, and the state must assess upon itself in some form taxes 
to secure a sufficient national revenue. Through fees, fines, 
costs of suits, &c., it can throw a part of the burden upon those 
who are most immediately concerned, but a large part of it muet 
be discharged by the community as such. 

§ 173. The problem of so imposing taxes that they may be 
as little burdensome as possible is one that has perplexed states- 
men in all ages. Some of the methods taken to raise money 
for current expenses without taxation are sufficiently curious. 
Down to quite recent times lotteries have been thus made use of 
on both sides of the Atlantic, — the people greedily buying a 
*' ticket," each acting in the hope that one of the great prizes 
will fall to him. This plan is now justly discredited as lowering 
the tone of social morality by giving a legal sanction to gambling, 
and fostering thriftless and reckless habits. 

Monopolies have been another device of state-craft. The 
notion that the state possessed exclusive control of certain trades, 
and of various branches of commerce, was general in the middle 
ages. Even where no fee was exacted, it was usual to require a 
charter from the king for every trade-guild, and this was after- 
ward made a source of revenue to the government. James I. 



DIRECT AND INDIRECT TAXES. 181 

of England made himself especially odious to the mercantile 
classes by granting monopolies of trade in great numbers to his 
court favorites, and to those who would pay roundly for them. 
This system was in some cases not without its merits as a 
promoter of enterprise, apart from its relation to national 
revenue. In some cases great undertakings would not have been 
begun without the grant of a temporary monopoly like that 
given to the East India company, and to the companies that 
effected the first English settlements in America. ]\Ioncpolies 
of the tobacco trade exist in France; of salt in British India. 
The licenses given in England to auctioneers, pawnbrokers, ped- 
lars, and to those who sell tea and tobacco, and the licenses 
required in most countries to sell spirituous liquors, are some- 
thins; of the same nature. 

The income from the royal demesnes was in early times a 
chief source of revenue. But these have been so largely re- 
duced by alienation, and are so small in proportion to the revenue 
now required, that they play little or no part in national finance. 
The sale of public lands once brought a very considerable 
revenue to the United States, but through the preemption and 
homestead laws this source of revenue is now almost closed. 

§ 174. Taxation, direct or indirect, is now the chief source 
of revenue. The former is levied either (1) upon the people 
according to numbers, or (2) on their property, real and personal, 
according to its value, or (3) on articles of luxury in use and 
possession, or (4) on the annual income of the people. The 
latter is levied on articles produced, usually those that are not 
of prime necessity, or on imported goods, usually such as are 
luxuries, or can be made at home. 

The comparative merits of direct and indirect taxation have 
been much disputed. Both forms exist in this country, the 
former being that chiefly employed by the state and municipal 
governments, while since the repeal of the income tax the 
revenues of the United States are mostly derived from indirect 
taxes. 

§ 175. Indirect taxes are so called because they are not paid 



182 ELEMENTS OF POLITICAL ECONOMY. 

into the treasury by the person who really bears the burden. The 
payer adds the amount of the tax to the price of the commodity 
taxed, and thus the taxation is concealed under the increased 
price of some article of luxury or convenience. The distribution 
of such taxation by the payer among his customers is not so 
easy a matter as is supposed. English economists, applying 
their formula, ''all things find their level," have treated this 
distribution as a thing of course. But experience shows that the 
incidence of taxation is not determined by laws as rigid as those 
of hydraulics. A tax is often paid directly and finally by the 
person on whom the law imposes it, and makes no change in 
prices. Were it otherwise direct taxation would be impossible, 
and the rich man, when assessed upon land, luxuries or income, 
would pass the burden on to his dependent neighbors. 

It is claimed as a merit of indirect taxation that vast sums 
may be thus raised without exciting dissatisfaction, or even 
attracting attention ; that duties which bring the government 
forty or fifty millions cost each consumer but a few cents a week, 
and are paid in almost daily instalments. As Theodore Parker — 
arguing against this method — puts it: "The people must pay and 
not know it ', must be deceived a little, or they would not pay 
after this fashion." The expediency of the method is all the more 
questionable in view of this fact. In a free country, where 
public opinion is the force that directs and controls national 
policy, it is eminently desirable that the people should feel that 
they are taxed, and that every appropriation of the legislature 
comes out of their pockets. " A free people ought to know 
what they pay for their freedom, and pay it joyfully; and they 
should as truly scorn to be cheated into the support of their 
government as into the support of their children. In the next 
place, a large revenue is no blessing. ... A revenue rigorously 
proportioned to the wants of a people is as much as can safely be 
trusted to men in power " (Dr. Channing). 

Another objection is that nearly all indirect taxes are burden- 
some checks upon societary circulation and the interchange of 
services, — not the less really such because their action is not so 



DIRECT AND INDIRECT TAXES. 183 

easily perceived. The amount of water in the channels of busi- 
ness may be lowered but a few inches, but that few inches turns 
shallow places into shoals, and impedes the whole current. The 
poor especially suffer under this system ; these little assessments 
come upon them pretty much in proportion to their numbers, 
not at all in proportion to their means. It is said that they can 
exempt themselves by ceasing to use the commodities taxed, 
none of which are articles of prime necessity. So they would, 
perhaps, if they realized how much they were paying in the 
course of the year, but the " few cents a week " is taken so 
quietly that it is not felt to be the burden that it really is. 

It may safely be laid down that indirect taxes should be 
assessed only on those articles whose consumption it is desirable to 
discourage, and if it be possible with a view to discourage them, 
rather than to revenue. For this reason all internal revenue 
duties, — except on spirits, tobacco and the like, — all taxes upon 
the capital or dividends of corporations who have not received 
a monopoly of their business, should, unless urgently required 
for revenue, be wiped from the Statute Book. 

Stamp duties are sometimes indirect and sometimes direct. 
The stamps put upon mercantile paper, receipts, and the like, 
come under the former head, and are objectionable. They re- 
semble the alcavala^ or tax upon every transfer of property that 
did so much to blight the industry of Spain. Taxes imposed in 
the same way upon inheritances and wills are not so objectionable, 
being direct taxes, but they are assessed upon property that is 
likewise subject to income or property taxes. They are not im- 
posed in this country, although there are taxes upon " collateral 
inheritances" in some states; but the stamp taxes on beer-kegs 
and on cigar-boxes are instances of direct taxation by means of 
stamps. 

§ 176. Experience shows that as a rule, lighter taxes of the 
indirect sort yield a larger amount of revenue than those that 
are heavier. In political arithmetic two and two do not always 
make four. Thus Sir Robert Peel and Mr. Gladstone achieved 
their great reputation as financiers partly through their raising a 



184 ELEMENTS OF POLITICAL ECONOMY. 

larger revenue through well-adjusted but lighter taxes. Similar 
to this was the immense increase in the post-office revenue 
through the lowering the rates of postage to two cents for half- 
ounce letters, and the use of postal cards. In each case the 
lowering of the price caused a great increase in the consumption 
which more than balanced the loss of revenue on each single 
amount. This fact of itself shows how much this method of 
taxation interferes with the business of a country and checks 
the exchange of services. 

In other cases the imposition of a very high excise or im- 
portation duty leads to smuggling or illicit manufacture. The 
duty covers the risk of discovery and punishment, and those 
who have been engaged in the manufacture or the importation 
excuse themselves for defrauding the revenue by the plea that 
the government is oppressing their business and waging war 
upon it. In general the tone of social morality i$ not so high 
as to prevent this plea from having some weight in the public 
opinion of the country, and the detection and punishment of 
the offender become difficult and expensive. Thus, under the 
regime of high excise duties imposed 1864-7, whiskey sold in 
open market for a less price per gallon than the amount of 
the tax per gallon upon its manufacture. In this way the 
business passed for a time into the hands of illicit distillers, and 
all others were obliged to stop. 

§ 177. Direct taxation is paid by the person who really and 
finally bears the burden. In most cases it is to a certain extent 
indirect also. Thus a heavy tax on real estate will raise rents, 
and a heavy tax on incomes will affect salaries. But neither the 
house-owner nor those who receive salaries are able to add to 
their receipts in anything like the same measure. 
. Of the three fbrms of direct taxation — capitation tax, property 
tax and income tax, — the first is the most objectionable, if em- 
ployed to raise a large part of the revenue. A small capitation 
tax upon every citizen is not an unfair way of reminding the 
voter that the government is carried on at the expense of the 
people. But a heavy tax of this sort — much resorted to in 



PROPERTY AND INCOME TAXES. 185 

earlier times — has all the disadvantages of indirect taxation ex- 
cept its popularity. 

Property taxes are assessed either upon all forms of property, 
real and personal, in proportion to its value, or upon articles of 
luxury included among personal property; or upon real estate 
alone. The first is the method practised in the state of New 
York ; the last is that in use in Pennsylvania, and is now gener- 
ally thought the wiser one. So much of personal property is 
now held in the form of bonds, mortgages, &c., that can be sent 
out of the state as the day for making returns comes round, that 
the evasion of a law taxing this sort of property is very easy. 
But real estate cannot be hidden, and a tax upon it reaches all 
classes, though not equally. It 'raises house-rent, &c. As 
assessments upon real estate must be made by public officers, the 
collection of the tax is expensive and it is liable to great abuses 
through favoritism. 

§ 178. The most modern and theoretically the fairest form of 
taxation is the income tax. It seems to make every one con- 
tribute to the wants of the state in proportion to the revenue 
which he enjoys under its protection ; while, " by falling equally 
on all, it occasions no change in the distribution of capital or in 
the material direction of industry, and has no influence on 
prices" (McCulloch). No other is so cheaply assessed and col- 
lected ; no other brings home to the people so forcibly the fact 
that it is their interest to insist on a wise economy of the national 
revenue. 

The first English income tax was imposed by Pitt 1798-1802, 
and renewed 1803-1815. In the middle ages the feudal 
tenure upon military service saved large expenses for the national 
defence, and most of the domestic aflfairs of the kingdom were 
administered by local authorities. The income of the royal 
demesnes was supplemented by customary feudal fines and pay- 
ments, and by a capitation or poll tax. At the outbreak of the 
Civil war the first excise taxes were imposed, but with the pledge 
that they would be abolished at the return of peace. The first 
Parliament after the Restoration was controlled by the landed 



186 ELEMENTS OF POLITICAL ECONOMY. 

interest ; it abolished all duties on the land, whether of service 
or payment, and confirmed to the landowner all rights without 
duties The feudal syatem came to an end at once. From this 
time excises and customs were multiplied by parliaments made 
up of landlords. At the Revolution the Whigs came to power, 
and the country gentlemen found themselves in a minority, but 
still stronp — -'gh to prevent the imposition of any but the 
most tritling'^ taxes on land. The rate of these taxes was after- 
wards through their influence made permanent and the prin- 
cipal comrautable at the pleasure of the landowner, and Mr. 
Pitt was defeated in his attempts again to make the land con- 
tribute its fair share. His income tax was a compromise that 
assessed the landlord's permanent revenue and the trader's pre- 
carious profits equally. At present the whole land-tax of Eng- 
land is about one-fiftieth of the revenue, while landed property 
constitutes a very large part of the whole wealth of the nation. 

]By 1840 the indirect system had attained the perfection 
humorously described by Sidney Smith: "Taxes upon every 
article which enters into the mouth, or covers the back, or is 
placed under the foot, — taxes upon everything which is pleasant 
to see, hear, feel, smell or taste, — taxes upon warmth, light and 
locomotion, — taxes on everything on the earth and the waters 
under the earth, — taxes on everything that comes from abroad 
or is grown at home, — taxes on the raw material, — taxes on 
every fresh value that is added to it by the industry of man, — 
taxes on the sauce that pampers the rich man's appetite, and 
the drug that restores him to health, — on the ermine which 
decorates the judge, and the rope which hangs the criminal, — 
on the poor man's salt and the rich man's spice, — ''on the brass 
nails of the coffin, and the ribands of the bride, — at bed or 
board, couchant and levant, we must pay. The schoolboy whips 
his taxed top, — the beardless youth manages his taxed horse 
with a taxed bridle, on a taxed road ; and the dying English- 
man, pouring his medicine which has paid 7 per cent, into a 
spoon that has paid 15 per cent., flings himself back upon his 
qhintz bed which has paid 22 per cent., and expires in the arms 



peel's income tax LAIVS. 187 

of an apothecary who has paid a license of a hundred pounds 
for the privilege of putting him to death. His whole property 
is then immediately taxed from two to ten per cent. Besides 
the probate, large fees are demanded for burying him in the 
chancel ; his virtues are handed down to posterity on taxed 
marble ; and he is then gathered to his fathers to be taxed no 
more." 

§ 179. Sir Robert Peel imposed the new income tax in 1842, 
in a time of general distress, after a series of great deficits in 
the annual budget. It brought in so much revenue that he and 
his successors in the treasury were able to relieve the mass of 
the people from the burden of some indirect taxes and to lower 
others. This last step, it was found, still farther increased the 
revenue, and these reductions became a settled policy in British 
Finance. But the whole British system, the income tax ex- 
cepted, must still be classed among the measures of bad policy by 
which the inequalities of condition are preserved and fostered. 
Seven-eighths of the revenue is still raised by indirect taxation, 
and the proposal to raise it all by the same means was made by 
Mr. Gladstone at the general election of 1874, but shared in 
his general defeat. The revenue is raised by duties upon a few 
articles in general use, such as sugar, tea, coffee, spirits and 
wine; while articles of expensive luxury, laces, satins and 
velvets, have been exempted. Cobden, Bright and some others 
advocate the removal of most, if not all, the existing duties and 
excises, and ask that the workingman's breakfast table be free 
from all taxation. 

§ 180. The objections to the income tax, however, are very 
strong. (1) That it is inqiiisitorial. It demands of the citizen 
a statement of his affairs for each current year, and this he must 
make to commissioners who are his neighbors, and perhaps his 
rivals in trade. This objection is hardly a sufficient one in case 
the tax returns are not published. If they are, there can be no 
doubt that it is a hardship for a tradesman to be obliged to in- 
form the public that he has had rather a bad year of it, and 
has hardly been able to make both ends meet. In many cases 



188 ELEMENTS OF POLITICAL ECONOMY. 

it is well known that persons reported and paid taxes upon a 
much larger income than they actually received, purchasing 
thus a reputation for wealth and prosperity. 

(2) Reports are more commonly dishonest in the other direction. 
To escape taxation, incomes are returned as much less than the 
fact. This has been frequently the case in England, where no 
publication of returns is made. Income from land and houses 
is indeed very easily ascertained, but that from trade and pro- 
fessions must be taken on the faith of the citizen. Certain 
London shopkeepers, whose stores were removed to make way 
for a city railroad, made claim for compensation on the basis of 
annual profits, aggregating five times as much as they had put 
on their tax-papers, and a jury cut down the estimate only to 
three times as much. 

(3) The equal assessment upon all sorts of income is claimed to 
be unfair. The lump value of two incomes of $5000 — one per- 
manent as derived from real estate, and the other precarious as 
depending upon the profits of a trade — is very different; but the 
law taxes both equally. This may be obviated by careful legis- 
lation. 

The great problem to devise an income-tax law that shall en- 
force honest returns without resorting to wholesale publicity, and 
shall duly discriminate between different forms of income, has 
not yet been solved. Till such a law is obtained, the least 
objectionable form of taxation must be that assessed on per- 
sonal and real estate. To make direct taxation on personal 
estate efi'ective, it should be levied on stocks through the 
company in which they are held, and deducted by the com- 
pany from the amount of the dividends. To assess it on divi- 
dends merely would be a mistake. Many companies are so situ- 
ated that they do not care to declare dividends, though they 
earn them. They go on year after year turning their net profits 
into principal invested, and the proprietors live on income from 
other sources. 

No income tax will probably be again imposed in the United 
States for many years. But if the industry of the country 



THE COLLECTION OF TAXES. 189 

should ever reach such a height of development as to enable her 
to furnish herself with the most of what she now imports from 
Europe, the revenue from customs will then be inadequate to the 
needs of the government. New revenue from some other source 
will take its place. If an income tax should be again adopted, 
one of the most important questions in regard to it will be 
whether all incomes, whatever their amount, should pay the 
same percentage. The law that Pitt devised, and all others in 
England down to 1861, made a discrimination between large and 
small incomes, and taxed the former more heavily. Since that 
year all incomes not exempted have been taxed equally, and the 
United States law was severely censured by some British writers 
for exacting a "progressive rate" of 5, 7^ and 10 per cent, for 
different incomes. Now taxation should be proportioned either to 
income or to ability to bear it. If the former, then the English 
law is unjust in exempting incomes below £100 ; if the latter, 
the American law and the earlier English laws were not unjust 
in making a discrimination among taxed incomes. It would be 
unjust to make the discrimination excessive, and tax all incomes 
above a certain sum — 50, 75 or 100 per cent. — as some wild 
theorists in France proposed. But the want of some discrimi- 
nation must be reckoned among those defects of English legis- 
lation that have tended to perpetuate and increase the vast dis- 
crepancies in English wealth. 

The practical objections to this form of taxation make a tax 
on land far less objectionable, especially in a country whose 
resources are imperfectly developed and its wealth unevenly 
distributed. 

§ 181. Among the important points in the economy of taxa- 
tion are (1) cheap collection ; (2) popular certainty as to amount 
and time. Both these and every other wise principle were set 
at nought by the system of farming the revenue adopted under 
the Roman empire and in France before the Revolution, and 
still perpetuated in some Mohammedan countries. The taxes 
were sold at public auction to a class of persons who remuner- 
ated themselves by wringing the utmost farthing out of the poor. 



190 ELEMENTS OF POLITICAL ECONOMY. 

The popular hatred and detestation of the publican class, dis. 
closed to us in the Gospels, related to this custom, and was well 
deserved and universal throughout the empire. Jewish tradi 
tion records but one honest publican. 

The second principle is also violated by unforeseen changes in 
the revenue system of a country that employs indirect taxation. 
Business men lose very much by every new piece of tinkering 
expended upon the tariff. They must, therefore, on the prin- 
ciple of insuring themselves, put a larger profit upon all com- 
modities, so that the lack of a wise and steadfast national 
policy inflicts a tax upon the people that brings no return to the 
treasury. 

§ 182. Ordinarily the taxation of a year should at least pay 
the national expenditure of the year. A nation that does not 
'* make both ends meet '' in times of peace and of no extraordi- 
nary calamity, cannot be regarded as wisely governed. But 
times that call for a vast extraordinary outlay of national wealth 
are incident to the history of every nation. In periods of great 
wars, for instance, the government must raise sums of money 
which far exceed those that it ordinarily raises by taxation, and 
national debts are incurred, to be gradually paid off on the return 
of peace. These debts are of no modern invention, but the 
fashion of paying them came in about the close of the seven- 
teenth century. The power of one generation of a nation thus 
to bind not only itself but subsequent generations is now an 
accepted principle. 

Are war debts really necessary ? Perhaps not ; any prosperous 
and free people that unanimously undertake a just war, and are 
not already encumbered by previous debts, could, by vigorous 
exertion, pay their way as they go. Prussia avoids war-debts j 
the wars of Frederick the Great left the country greatly de- 
pressed and exhausted^ but without a dollar of indebtedness. 
The Hohenzollerns, it has been said, brought good business 
abilities with them from Nuremberg. England's great war with 
the first French Empire left the country the burden of 
£600,000,000 of debt. Had she begun the war with a clear 



WAR DEBTS NOT NECESSARY. 191 

financial record, and assessed every year the same amount of the 
total taxation raised during its continuance, she would have 
come out of it with a surplus in the treasury. Could the taxa- 
tion have been raised one-third higher than it actually wa3 
during our recent civil war, and kept at that from first to last for 
five years, the country would have come out of the struggle with 
no indebtedness. This is the policy that all great writers on 
finance, — Hume, Adam Smith, Ricardo, McCulloch, &c., — ■ 
recommend. For political reasons, good or bad, it is never 
adopted. It is feared that a great increase of the immediate 
public burdens will strengthen the peace-party and weaken the 
government. It is thought that the people are not at first aware 
of the magnitude of the sacrifices required of them, and heavy 
taxes are not imposed till the war is coming near a close. For 
these and the like reasons the nation comes into the money 
market as a borrower. Thus, it is thought, the burden will be 
80 distributed as to be imperceptible and lightly borne. But all 
such attempts at distribution add to its real weight and to the 
injury it inflicts. 

§ 183. Governments generally borrow at a great disadvantage 
when great capitalists control the money market. The public 
credit is at the lowest point in war times, and no patriotism 
holds men back from taking advantage of this. In former times 
this was remedied in a vigorous wayj Colbert cut down the 
capital of the public debt to the amount actually furnished by 
each lender, and treated the surplus as an illegal because usurious 
exaction. By this partial repudiation he brought up the public 
credit at once and was able to borrow at very reasonable rates. 
The British ministry in the reign of Queen Anne replaced all 
the old loans by others that paid interest at market instead of 
war rates ; giving the lenders the choice between that and re- 
demption. During the war that England waged with Napoleon 
her capitalists were on the outlook to prevent any renewal of 
that proceeding. The government was forced or induced to 
fund the debt as fast as it was contracted. That is, money was 
raised by selling perpetual annuities, redeemable at par, for such 



192 ELEMENTS OF POLITICAL ECONOMY. 

price as they would bring in the market. These annuities, 
considered as the interest upon the nominal principal, were at 
very low rates, but the principal itself was not paid in full to 
the government. The buyer offered to take the loan at thirty, 
forty or fifty per cent, discount, according to the state of the 
money market. Thus of the 600 millions sterling added to 
the national debt, only 484 millions was actually paid to the 
government. The perpetual annuities amounted to 3 per cent, 
interest upon the nominal, and 5J per cent, upon the actual 
loans. With every rise in the national credit, the nominal value 
has become more nearly the actual one, so that even by pur- 
chases in open market the nation could now redeem its debt 
only at the par value, i. e., by paying a sum to its creditors that 
it never received from them. As capital is worth much more 
than 3 per cent., taking year with year, it is thought by many a 
saving not to pay the debt. Others oppose payment on the 
ground that its wide distribution imparts a certain stability to 
the whole political edifice by identifying the interests of the 
people with those of the government. Cobden, Bright and the 
Manchester school generally oppose its payment on the ground 
that it holds England back from engaging in new wars, by putting 
her under bonds to keep the peace. The population of England 
is twice as great, and her wealth four times as great, as when the 
debt was contracted two generations ago, yet its amount has been 
but slightly diminished. Few people seem to expect that it ever 
will be paid, and one Tory organ, denouncing Gladstone for his 
policy of harassing interests, expressed the fear that he would 
be for attacking the national debt next. Two measures, how- 
ever, look toward its redemption. There is a Sinking Fund 
managed by commissioners, which uses such money as is placed 
at its disposal to buy up " consols," and hold them at interest, 
expending that interest in fresh purchases. Another measure 
of Mr. Grladstone's has been to sell terminable annuities charge- 
able to the budget, and buy up with the proceeds the perpetual 
annuities formerly granted. But at the present rate of re- 



ENGLISH AND AMERICAN POLICY. 193 

demption four centuries must elapse before the whole would be 
discharged. 

§ 184. The United States have always acted on the policy 
of speedy redemption * The debt of the Revolution and that 
of the second war with England were discharged by .1835, less 
than sixty years after the former began. At the rate of redemp- 
tion pursued since the close of the civil war, the nation would 
be out of debt by 1890, and much sooner if the national revenue 
be not reduced and the large sums that are now expended in 
paying interest are applied to paying the principal. 

§ 185. The existing debt of the United States was not funded 
as fast as contracted ; high rates of interest were offered rather 
than large discounts on the principal. Secretary Chase, what- 
ever his mistakes, strove to keep the debt under national control, 
and even borrowed for periods that were far too short, so that 
some of his earlier loans fell due during the war. Afterwards 
three forms of bonds were adopted, — 7-30s, 8-40s and 5-20s, 
the two latter being payable at option at any time between 
eight and forty years, &c., after issue. Yet, as in England, 
the real rate of interest upon the debt is much higher than the 
nominal one, — in some cases nearly eleven per cent, instead of 
six. The government had made large issues of paper money, 
which after a time depreciated in value very greatly, fluctuating 
with the course of our military history, as the public confidence 
in its redemption rose or fell. But vast quantities of this money 
were subscribed for United States bonds and accepted at par ; 
so that the nation received on an average about fifty-seven cents 
in gold on the dollar for its obligations, on which it pays full 
interest and is bound in all honesty to pay the full principal. 

This is the calculation of Prof. Bowen of Harvard College. 

§ 186. So long as the government continued to borrow money 

and to accept this paper-money at par in subscriptions for loans, it 

was not strictly an inconvertible currency, and the country had 

to some extent the control of its volume. When the government 

ceased to borrow, it lost this redeeming feature, and became a 
18 



194 ELEMENTS OF POLITICAL ECONOMY. 

currency of the most objectionable type. The question was then 
raised whether it should be allowed to continue thus, or steps be 
taken to bring it to par with gold. Here two parties were devel- 
oped. One proposed to accumulate gold in the treasury, and fix 
a day for j-esumption. The other proposed to make these notes 
convertible into bonds bearing interest at B.65 per cent, or some 
similar rate, and reconvertible into treasury notes at any time at 
the holder's option. The former plan prevailed, and was carried 
into efi"ect January 1, 1879. 

The steady appr^iation of our paper-money under the steps 
preliminary to resumption caused great suffering to the debtor 
classes of the country. Farmers, for instance, who had borrowed 
money on mortgage when the dollar was worth sixty cents in gold, 
found themselves obliged to repay these mortgages in dollars worth 
one hundred cents. They very naturally resisted the policy which 
made this necessary, not only as regards their own debts, but also 
those of the government. Hence the rise of the Greenback 
Party, with its theory that money is the creation of a govern- 
mental jiat^ its demand that the debt be paid in paper-money, 
and its proposal to substitute treasury notes for national bank 
notes. The party reached its maximum strength during the years 
of business distress which began in 1873, and declined with the 
actual resumption of specie payments and the revival of our in- 
dustries. There is a possibility that its proposal to replace bank 
by treasury notes may come to the front again when the repay- 
ment of the outstanding bonds has gone so far as to deprive the 
banks of the basis on which their paper-money rests. (See § 170.) 
Instead of devising some other basis of issue equally or sufficiently 
secure, it will be proposed to issue an equal amount of treasury 
notes. As a note is a debt bearing no interest, owed by the issuer 
to the holder, there would seem to be some fairness in asking that 
the privilege of such issues should be confined to the government. 
But any advantage which would be derived from making such 
issues a government monopoly would be more than counterbal- 
j^nced by the loss to the country through the destruction of its 
Jgcal centres of isgue, aod the substitution of the Treasury at 



INTERNAL REVENUE TAXATION. 195 

Washington and its branches in the great cities as the only 
places of issue. Our monetary system tends too much to cen- 
tralization already. This plan would increase that tendency 
tenfold. It would destroy many of the country banks, which 
depend on the privilege of issue for their profits, and in this 
way would deprive us of the most important agencies for the 
facilitation of association and the fertilization of industry. 

§ 187. During the war the government found it necessary to 
establish a system of internal revenue taxation, by which a great 
number of articles were made to contribute to its support. When 
the necessity for such a revenue ceased, these taxes were removed, 
with the exception of duties on whiskey, tobacco, playing-cards, 
matches, patent medicines and bank-checks, and a tax on the 
capital and deposits of banks. The removal of all these except 
the two first is now accepted generally as advisable. But there 
is good reason for objecting to these two being made exceptions. 
Of course the appetite for whiskey and that for tobacco are as 
legitimate objects of taxation, with a view to discouragement, as 
anything can be. But these taxes fall upon the States with no 
fair reference to their ability to bear the burden they impqge. 
In particular, the Southern States pay under the whiskey and 
tobacco taxes large sums into the national treasury which would 
be better expended on the education of their people and the 
payment of their debts. These taxes should be removed, not to 
give the country "free whiskey" or "free tobacco," but to en- 
able the States to relieve their necessities from this very source 
of revenue. 

§ 188. The United States government is one of a series of 
governments — national, State, and county or township or muni- 
cipal — whose aggregate costliness is greater than that of any 
other system in the world. All our officials are paid, and we 
have more of them in proportion to the population than has any 
other country. Under the peculiar provisions of the national 
Constitution, the general government discharges fewer functions 
than in any other country, except perhaps Germany. It leaves 
to the States the local police and the most part of the manage- 



196 ELEMENTS OF POLITICAL ECONOMY. 

menfc of civil and criminal justice, but it retains to itself sev- 
eral of the easiest and most popular sources of revenue, and 
compels the States to raise their revenue by direct taxation 
mainly. It alone can impose duties on imports. It alone can 
levy internal revenue taxes in such a way as not to discourage 
the production of any article in any particular locality. Ordi- 
narily, the revenue of the general government must be much in 
excess of its legitimate expenses. This leads to very gross abuses 
in congressional legislation, by which large sums of this surplus 
are appropriated for public works which have no real claim upon 
the national treasury. It would be much better to arrange for 
its distribution among the States in proportion to population, as 
was done with the surplus of 1835. Such a distribution could 
be accompanied by conditions as to its expenditure in the educa- 
tion of the illiterate and the extinction of local and State debts. 
It would bind the States more closely to the national Union, 
while relieving their people of burdens which at present press 
with severity upon many of them. 



CHAPTER TENTH. 
The Science and Economy of Commerce. 

§ 189. Commerce is the interchange of services or pro- 
ductions between persons of different industrial functions, effected 
either directly or through the intervention of third parties. 
The motive to such an interchange is found in the fact that the 
labor which each expends upon the production of the article 
which he gives is less than that which he would have to expend 
to reproduce the article which he receives. Thus each receives, 
therefore, what is of greater value to him, than what he gives. 

§ 190. Commerce is therefore the outgrowth of the division 
of labor, and has kept pace with that in its growth. In the 
first stage, commerce existed only between persons of the same 
family or tribe, and involved no formal exchange of commodities. 
The savage husband undertook the dangerous duties of hunting, 
fishing and war; the wife the laborious work of the household 
and their petty agriculture. Both shared in the products. 
Afterwards members of the same tribe rendered each other 
certain customary services, such as mutual help in the pastur- 
age of the cattle and the tillage of the Jields of the mark (§ 80). 
Then through the rise of a difference of employments or pos- 
sessions between the tribes, a piece of neutral ground became 
the meeting place of a group of these tribes for mutual ex- 
changes, in which exchange cattle were used, less as money 
than as a standard to estimate comparative values. Then arose 
a class of traders, whose business it was to facilitate exchanges 
by ascertaining the reciprocal wants of different persons, and to 
negotiate for terms advantageous to each. Either from the first 
or in course of time, these traders became possessed of capital 
enough to purchase what was offered for sale, which they then 
again offered to those who needed it, on terms advantageous to 
themselves. 

The rise of this class was clearly an advance in social develop- 

197 



198 ELEMENTS OF POLITICAL ECONOMY. 

ment. A function hitherto discharged by persons, who might 
be better employed, was transferred to more competent men. 
The trader knew the demand and supply of every article more 
thoroughly and readily than its producers or its consumers : to 
obtain that knowledge was his special work. Instead of spending 
much of their time in searching for a customer, producers found 
it to their advantage to employ his knowledge and skill, and to 
d<^vote the time thus saved to larger production. While he 
aaded nothing directly to the amount or the utility of the pro- 
ducts of industry, he helped to increase the amount of pro- 
duction indirectly by economizing the time of the producers. 

One of the most important of these traders is the banker or dealer in 
money, whose function has already been discussed. All that is said in 
Chapter VIII. is, in some sense, a subordinate part of this chapter. 

§ 191. Still the trader, the middleman or go-between of these 
exchanges, is but a means or instrument, whose end is com- 
merce. And as in the case of other instruments, how to dispense 
as much as possible with his services is one of the problems of 
economic organization. His power over the producer and the 
consumer, which is measured by the proportion that his profits 
bear to the value of the article exchanged, declines steadily 
with the advance of society in intelligence and the power of 
association. In the early time he took a very large share, be- 
cause the producer and consumer being at a distance from each 
other, knew little of each other, and because the risks and the 
expenses of his business were great. Afterwards his profits de- 
clined, mainly because with the growth of population and the 
advance of mutual knowledge, the chances of producer and con- 
sumer dispensing with his services and dealing directly with 
each other, increased. But even now his profit is a tax upon 
both, which should be reduced to a minimum. For he adds 
nothing to the real wealth of society. He neither directs and 
manages a vital change in the form of matter as does the 
farmer, nor a chemical and mechanical change in form as does 
the manufacturer. He merely transfers things from the place 
of their production to the place of demand : The products of 



DISTANT AND NEAR COMMERCE. 19S 

other men's labor pass unchanged through his hands, — with' 
their value increased by the cost of transportation and the 
amount of his profits. 

When Charles Fourier was young, he was on a visit to Paris, and 
priced at a street stall some apples of a sort that grew abundantly in his 
native province. He was amazed to find that they sold for many times 
the sum that they would bring at home, having passed through the hands 
of a host of middlemen on their way from the owner of the orchard to 
the eater of the fruit. The impression received at that instant nevp 
left him ; it gave the first impulse to his thinking out his socialistic 
scheme for the reconstruction of society, in which, among other sweeping 
changes, the whole class of traders and their profits are to be abolished. 

§ 192. It is evident that the amount of this tax upon indus- 
try is greatest when the consumer and producer are at the 
greatest distance from each other, and are consequently most 
dependent upon the trader. Where the producer has the 
market close at hand he is under no necessity of sacrificing any 
large part of his profits. Sooner than do so, he will be his own 
trader, and deal directly with his customers. 

Commerce between persons in neighborhood is also a com- 
merce of swift returns. The capital employed circulates much 
more rapidly, and accomplishes a much larger amount of service 
in proportion to its amount. Instead of considerable amounts 
of it being thrown out of possible use, because in transit between 
distant points, the whole is directly and immediately available : 
as soon as the manufactured goods have left the factory, they are 
ready for purchasers. As soon as the flour has left the mill, it 
is available for human food. The waste of time involved in 
more distant commerce is totally avoided or reduced to a 
minimum. 

§ 193. Commerce between persons in neighborhood leaves 
little opening for those traders' speculations by which artificial 
scarcity is produced. Commerce between distant points involves 
the passage of large quantities of goods through single ports of 
entry and exit, on their way from the field of their production 
to that of their consumption. As they change hands at this 
point from one trader to another, their price to their final pur- 



200 ELEMENTS OF POLITICAL ECONOMY. 

chaser is mainly fixed. If a number of traders foresee a slight 
scarcity of supply, it is not unusual for them to club resources, buy 
up all that they can lay their hands on, and hold it for an advance. 
Unless some unforeseen circumstance defeat their plans, they are 
thus enabled to put into their pocket large sums, which repre- 
sent simply no service rendered to society, — no benefit to either 
producer or consumer. Thus in the grain-trade, v^hich centres 
so largely in Chicago, traders have repeatedly brought about a 
scarcity of this sort, and raised the price of flour to the Eastern 
and European consumer. Were the wheat-crop of the wholB 
country, like that of Pennsylvania, consumed in the vicinity of 
the farms, " such corners in wheat," as they are called, would 
be impossible. Very different is the desert of those, who, fore- 
seeing an enormous scarcity, buy up the present supply and 
hold it over till the scarcity occurs, or buy up in one district to 
sell in another. They diminish the present consumption and 
enforce economy of resources ; they spread the dearness over a 
larger space and time, and thus prevent scarcity from becoming 
real famine by making the supply go as far as possible. What- 
ever the motive, a real service is rendered in this case. 

This production of artificial scarcity is not an exceptional or 
difficult thing when the producer and consumer are at a distance 
from each other. When California was quite a young state, and 
depended almost entirely upon the Atlantic States and Europe 
for all supplies, the prices of all importations were kept enor- 
mously high by forestalling the San Francisco market. " It is 
a frequent occurrence that a few wealthy men combine together 
to buy up all of a certain kind of merchandise and then control 
the price." In Australia (§ 274), especially during the time 
when the country was dependent upon England for nearly all 
sorts of goods, the same system was " carried on in the most 
systematic manner " and has not ceased yet. 

See Reairietiona on Trade, from a Colonial Point of View, by David 
Syme (republished from the Fortnig^htli/ Eeview), Boston, 1872. 

§ 194. These facts are only extreme instances of the power 
of the trader to dictate his own terms, when the producer has to 



ARTIFICIAL DEARNESS AND CHEAPNESS. 201 

send his wares to a distant market. These conspiracies are but 
the extreme form of the general understanding that grows up 
between the body of capitalists, when the chief supply of an 
article is concentrated within a limited area and in a small num- 
ber of hands. Such an understanding, easily reached in such 
circumstances, will, unless checked by some other competition, 
enhance the price of goods quietly and by degrees that escape 
notice, but are none the less burdens upon the producers and 
the consumers. The traders can " fix their own prices " in such 
cases. 

The same power of the trader over the prices that rule in a 
distant market is sometimes displayed in producing an artificial 
but temporary cheapness, to be followed by such a rise of prices 
as will recoup him for the loss. Where the consumers of an 
article make an efi"ort to dispense with his services and those of 
its distant producer, by developing resources for its supply that 
are nearer at hand, he not seldom finds it worth while to ofier 
large quantities at less than cost price. He shares this sacrifice 
with the producer of what he sells, and both have the intention 
to hold fast the market, and retrieve their present losses by 
larger future gains. The effect is to force the new producer of 
the same article to cease operations, " unless he have a very strong 
back indeed,'' and can afford to go as far in making sacrifices as 
his longer-established rivals. As this is very rarely the case in the 
first stages of an enterprise, there is no choice but to cease pro- 
ducing, and the market is left dependent upon the trader and 
his partner, the distant producer, although every facility existed 
for producing the article more cheaply and abundantly at home. 

See II 252 and 284. Coleridge says: (VI. 511) '' It has already been 
sbown, in evidence which is before all the -world, that some of our manu- 
facturers have acted upon the accursed principle of deliberately injuring 
foreign manufacturers if they can, even to the ultimate disgrace of the 
country and loss to themselves." 

§ 195. Even as regards domestic commerce, there is -large 

space for reform in the diminution of the number and the profits 

of the middlemen, who stand between producer and consumer. 

*' Any one who inquires,'' says Mr. Mill, " into the amount that 



202 ELEMENTS OF POLITICAL ECONOMY. 

reaches the hands of those who made the things he buys will 
often be astonished at its smallness." This bears especially 
hard on the working classes ; it deprives them as producers of 
the benefit of market rates for their workmanship. It taxes them 
more heavily as consumers than it does the rich who can afford 
to buy at wholesale. He needs most to economize, yet he pays 
the highest prices, a fact that does much to counteract the 
natural tendency towards an equality of condition ; as Solomon 
said, " The destruction of the poor is their poverty." The 
earlier English economists regarded free competition as a suffi- 
cient corrective of this ; if profits were excessive, more capital 
would flow into the trade, and the competition for custom would 
bring prices down. But while this has had its effects, it is by 
no means sufficient, especially in small communities ; trades 
tend to become informal associations to keep prices up to a cus- 
tomary standard of profits, which in England averages about 
fifty per cent, of the wholesale price. 

Cooperative stores are a means of obviating this difficulty, from 
which great things are expected, and perhaps justly. In these 
the consumers associate to establish a retail store by their joint 
contributions, and employ competent persons or some central 
agency to purchase the goods in large quantities and at the 
lowest wholesale price, as well as of the best quality. These are 
retailed for cash at a margin of profit that more than covers the 
cost of the operations, and the net profits are distributed at the 
end of the year in proportion either to purchases made or to 
stock held. Some of these stores sell only to their stockholders ; 
others sell to accepted customers, and give these a small share 
in the joint profits proportional to their purchases ; others sell 
to the public at large, and distribute the profits among stock- 
holders only. In the third method (and in the second, in a less 
degree) the cooperative basis of their operations is given up ; 
the establishment becomes merely a joint stock company to deal 
in a certain class of goods, and the ordinary dealers' motive to 
overcharge or adulterate goods comes into play. These stores 
originated with the Owenist party in England about 1830 ; they 



COMMERCIAL CREDITS. 202 

exist in great numbers in that country, in France and in 
Germany, where Schultze-Delitzsch has greatly promoted their 
establishment. Some look to them for a complete revolution of 
the retail trade and the abolition of the retail trader. But the 
destruction of any function in the organization of society would 
be a retrograde step. The chief service that these stores can 
render is in restraining the trader from adulteration, and in 
forcing down prices to a just rate ; in substituting cash payments 
for book-credits, and perhaps in finally leading him to take his 
customers into partnership by dividing among them a share of 
his annual profits. 

§ 196. Another questionable feature of modern commerce is 
its transaction of business on credit, or " on time," as it is called. 
The buyer ^f a quantity of goods does not pay for them in 
ready money of any kind, but gives his note payable in thirty, 
sixty or ninety days, which the seller can only convert into 
available money by having it discounted at the bank. If the 
buyer does not pay the note at the date specified, the seller has 
to pay it himself, and put the amount into his list of bad debts, 
unless the law gives him redress by a levy on the property of 
the buyer. 

(As we have already said, this method of creating the credit- 
fund of money of account on the books of the bank might be 
abolished without abolishing the credit-fund itself, and the 
separation of the two — of our money of account from our dis- 
count system — is one of the problems that greatly concern the 
future of modern business.) 

Now, of course, the seller cannot afford to put the goods at as 
low a figure as if he were paid in cash. He even in some cases 
designates different prices according to the length of the credit; 
in other cases, each house or each trade sells on time for a fixed 
number of days. And the difference is not merely the amount 
that he will lose by the discount of the note. He has to insure 
himself against bad debts by an increase of his profits on all 
transactions. He must charge more to good customers in order 
to insure himself against bad ones. This has a tendency to 



204 ELEMENTS OF POLITICAL ECONOMY. 

ibrce up all prices, and to increase the value of the goods in 
their passage from producer to consumer without adding to their 
utility. 

A transition to buying and selling for cash would greatly 
simplify business. It would separate transactions that ought to 
be treated distinctly and each on its own merits. It would rid 
good houses of the burden of this mutual insurance system, 
through which they suffer for the instability of others. It 
would separate the business of borrowing money at the bank 
from the business of buying and selling, and make ''every tub 
stand on its own bottom." It would send every man to bank to 
borrow money on his own security, or that of his neighbors who 
know something of his affairs, instead of enabling him to borrow 
there on the credit of those from whom he buys. 

§ 197. Whether and how far the change would be effectual 
in restraining the spirit of reckless adventure and speculation, 
without impeding legitimate enterprise, is a more difficult ques- 
tion. It would at least bring distinctly into view the question 
of the sufficiency of every person to whom an advance is made, 
without complicating it with the desire to make a sale to him. 
And this question would come before experts, whose business it 
would be to make themselves acquainted with the facts, instead 
of business men who have hands and heads full of other matters. 
As a rule it would come before a man's own neighbors and 
acquaintances, the directors of some local bank, instead of being 
settled in a city where the statements of a " Commercial Direc- 
tory" or some similar institution, are the only data for proceed- 
ing. If joint guarantee were required it would have to be 
furnished as in Scotland by two or more responsible neighbors, 
who would need to know something of his standing before they 
risked what would be a large loss to them, while it might be in 
comparison a small loss to the wholesale firm in the city. 

A great change for the better in this regard has been effected 
since the war. Six months' credit has been generally shortened 
to thirty or sixty days. The possession of a trustworthy me- 
dium of exchange, of bank-notes that circulate throughout the 



THEORY OF INTERNATIONAL EXCHANGES. 205 

whole country, and that with a new rapidity, has done much 
good in this respect. The loss of a multitude of bad debts, and 
the consequent decline of confidence in distant customers, have 
done more. But there is still great need of improvement and 
perhaps of the abolition of sales on time. For instance, one of 
our largest dry goods houses made a thorough overhauling of its 
list of debtors during the panic of 1873, and found that it knew 
simply nothing of its prospect of ever getting any money from 
nearly a third of them. 

§ 198. When we know the function of the trader, and the part 
he has played in industrial history, we are better able to decide 
between the comparative benefits of home and foreign commerce. 
The question is not of merely theoretical interest; upon the 
answer generally accepted as correct must depend the public 
policy of each nation, for the revenue system of every country 
has its effect to encourage or discourage one or both. 

Adam Smith and Jean Baptiste Say, the founders of the mod- 
ern school of economists in England and France, pronounce in 
favor of domestic commerce as the more profitable of the two. 
Smith says that if a given amount of capital be employed in 
purchasing and interchanging goods within the same country, 
that country will reap twice as much advantage from the activ- 
ity of that capital, as if it had been employed in purchasing and 
interchanging an equal value of goods with another country. 
For in the one case encouragement is given to only one native 
industry ; in the other to two. Nay more, — the operations of 
domestic commerce being far swifter than those of foreign trade, 
the advantage to the country is proportionally great. In his 
day it was possible to effect twelve such exchanges at home for 
one abroad, making capital employed in the former twenty-four 
times as useful to the country as if it were engaged in foreign 
trade. (With modern facilities for transport, this ratio would 
of course be very much decreased.) In his view the amount of 
employment that a country can furnish to her people, depends 
upon the amount of capital in circulation ; so that a pound em- 
ployed in the purchase of British carpets for sale in the home 



206 ELEMENTS OF POLITICAL ECONOMY. 

market might furnish twenty-four times as much work to 
EngUsh workmen as a pound employed in trading with Portugal 
for wines. A trade, therefore, by which the merchant grows rich 
may be one from which his country derives no corresponding 
advantage. In asserting so much, Adam Smith certainly yielded 
the fundamental principle of his whole system, which was that 
if society will simply remove all restrictions from individual 
enterprise, and allow every one to do with his own what he will 
— what he finds pays him best — society will reap the largest 
possible benefit. 

§ 199. The English school of course enter protest against 
this concession, and try to refute the reasoning on which it is 
based. Ricardo and McCuUoch give substantially the same 
answer. They assume in their answer that goods must be paid 
for in goods ; that if England and Scotland give up a certain 
commerce with each other, because the one can better supply 
itself from one foreign country, and the other from another, 
those countries will begin to purchase the products of English 
and Scottish labor to the same amounts, and nobody will be 
thrown out of employment in either country by the cessation of 
the domestic exchange. Now this assumption, which they do 
not put in so many words, but leave to be implied, is not to be 
conceded without evidence. Rather there is much evidence to 
the contrary. England and China have a large mutual foreign 
commerce, but, in spite of the Christian forcing the pagan to 
allow the importation of opium, millions upon millions of Eng- 
lish silver are absorbed every year by the Chinese, in payment 
for teas and silks, which are not paid for in English goods. So 
also India absorbs yearly millions of silver coin in payment for 
her native goods, all that she takes from England being insufl&- 
cient to pay for what England buys of her. The trade between 
our own country and Europe is after the same fashion. England 
and the Continent do not " call it square" at the end of every 
year, balancing our raw cotton and breadstuff's against dry goods 
and hardware. We pay over millions upon millions of gold and 
silver to balance our accounts. Europe takes no more of what 



GOLD AS A COMMODITY. 207 

we have to sell than she must ; she sells us all she can. For 
us, therefore, these attempted refutations of Smith have no 
force, and unless some better be given, we must concede his 
position that American capital, if spent in encouraging the pro- 
duction of some of those articles that we pay Europe gold and 
silver for, would confer greater benefits on the country than if 
spent in importing them. The second part of his argument — 
that from the comparative rapidity of the two forms of com- 
merce — Ricardo and McCulloch do not touch. 

§200. " But after all, even when the balance is paid in gold 
and silver, still the fact is that the exchange is of commodities 
for commodities. For in that case gold and silver are them- 
selves given in exchange as commodities, not as money. And 
it is in this new capacity alone that they are productive ; in all 
other cases they merely facilitate interchanges of parts of the 
national wealth ; but when exported as commodities, they pro- 
cure in return other commodities that add to the aggregate of 
that wealth." So J. B. Say argues. 

Under this reasoning lies the notion of the passivity of 
money, — that it plays no part in production, but only in 
exchange ; that any increase of the amount of it in circulation, 
only increases in that proportion the money price of other com- 
modities; that any decrease in that amount only diminishes the 
price. This notion runs counter to the observed facts in the 
history of money, as recorded by Humboldt and Arthur Young, 
for the last four centuries, and by Thomas Tooke {History of 
Prices), for the present century. A tendency to decline in the 
purchasing power of money with the increase of its amount, is 
indeed a very natural supposition ; no doubt, in an unprogressive 
society, such would be and has been the effect, as has been shown 
by the vast decline in the purchasing puwer of silver in India, 
since the English began to trade with her people. But a pro- 
gressive society is one that resists such natural tendencies ; an 
influx of the instrument of association into such a country, tends 
to stimulate all sorts of productive industry. It finds — except 
in periods of financial depression — a host of persons waiting for 



208 ELEMENTS OF POLITICAL ECONOMY. 

tliis very instrument, to begin new lines of production, and it 
sets many new wheels moving. " Hence new uses will be found 
for it when it is abundant, new avenues of commerce will be 
opened, new branches of industry will be essayed, until in- 
creased production finds employment for the increase of money. 
If money has increased, industry and trade are increased; and 
thus the tendency to depreciation is met and strongly counter- 
acted.'' 

See Stephen Colwell's Ways and Means of Payment (Phila. 1859), 
p. 556. 

§ 201. The drain of the precious metals from a country, 
though its effects are alleviated by the creation of the credit 
fund for domestic payments, is therefore decidedly injurious to 
its general interests. "It is not exactly true to say, as has too 
often been said over and over again, since Turgot first said it, 
that money is a commodity like any other. That proposition is 
untrue, except as it regards the metal of which money is made ; 
but in so far as it is the means of exchange, it has peculiarities 
of its own, which clearly distinguish it from other commodities. 
If iron and cotton are scarce, those who need them suffer by 
the scarcity, but it has no effect upon the prices of other ma- 
terials. • If, on the other hand, money is scarce, the price of 
everything else is affected. Every one must make exchanges, 
must buy and sell ; if, therefore, there is a tendency to a defi- 
ciency or a scarcity of the means of exchange, every one is 
straitened, and all transactions become difiicult. Just as 
when the water falls in its rivers, traffic is interrupted because 
the vessels are aground ; so, when money is diminished or dis- 
appears from the channels of circulation, articles pass from one 
owner to another with great difficulty. We have got to the 
point of dispensing, in the commercial transactions of advanced 
countries, with a great quantity of money by replacing it by 
credit in all its forms ; but, given the quantity of money that is 
still necessary, its rarity produces an embarrassment, and some- 
times even a general crisis." 

See Le Marche Monitaire et aes Crises depuis Cinquante Ansj by Emile 
de Laveleye (1865). 



MONEY STIMULATES PRODUCTION. 209 

The possession of a large quantity of money is, within limits 
that no progressive country has reached, a great advantage. It 
enables any country to organize its industry upon such a scale, 
and to carry its division of labor to such perfection, as will bring 
down the price of all the products of industry, while affording a 
large return to both the capitalist and the laborer. It therefore 
makes such a country a cheap place to buy in, mainly because 
of that accumulation of money, which was to make everything 
dear. And if any country have got the lead in this respect, an 
unrestricted trade with those that are not so well off for money 
will not correct but only increase Jhe inequality. It will con- 
tinually drain the precious metals out of those countries to 
increase its own store, because it will steadily keep the balance 
of trade in its own favor. It will sell others what it pleases, 
and buy of them what it must. If there are exceptions to this 
rule, they are to be found in those unprogressive countries, in 
which the wants of the people are so few that it is impossible, 
after selling them everything that they will buy, to balance the 
purchases of raw materials from them. Such countries are 
India and China. 

This truth is the germ of the theories of the Mercantile 
school ; it. is a doctrine " combated by the great majority of 
economists," who travesty the principles of that school as if men 
like Colbert, Locke and Steuart held that one could eat or wear 
money. But these same economists, proclaiming the passivity 
or barrenness of money, save when given in exchange for 
foreign goods, would have us believe that those countries which 
receive it in that exchange are so grandly generous, or so blind 
to their own interests, as to give commodities of the highest 
utility for one that has no utility, or that only possesses it when 
it can again be sent abroad. 

202. The theory of foreign exchangee now maintaiaed by the 
English school, and first enunciated by Torrens (1808) and 
Ricardo (1817), is given in a very forcible form by Mr. J. S. 
Mill. It bases the advantage of the foreign trade exclusively 
upon the comparative productiveness of labor, or of different 
14 



210 ELEMENTS OF POLITICAL ECONOMY. 

kinds of labor, in different countries. Each country exchanges 
with others goods that cost it less labor than those that it re- 
ceives would have cost it if produced at home. Each saves 
labor by the bargain, and therefore each derives benefit from the 
exchange, even though it might have produced the same articles 
at home for less labor than they cost the other. For even if it 
be as easy to make iron in Pennsylvania as in England, yet if it 
pay better to raise wheat for exportation because England's need 
of wheat compels her to give more iron for our wheat than the 
labor spent in raising wheat would have produced, we are gainers 
by the exchange. Each country, therefore, should manage its 
economy not on the lines indicated by its natural resources, but 
on those that are indicated by the exchangeable value of its 
products in the markets of the world. Every nation, therefore, 
Mill says, instead of adopting a national policy that looks to the 
development of any species of industry, should allow things to 
take their natural course, being assured that to do the things 
that are easiest, and to buy in the cheapest market and sell in 
the dearest, are the most remunerative ways of procedure. 

§ 203. We have already given some reasons why commerce 
between distant points is an undesirable thing, as open to the 
exercise of tyrannizing power by traders and their combinations. 
The next chapter will be chiefly devoted to showing that while 
individuals may find it to their account to buy in the cheapest 
market and sell in the dearest of those that already exist, com- 
munities will frequently find it more to their account to create 
new markets by cherishing a varied industry at home. At this 
point, therefore, we shall only remark : 

(1) That exchanges are not, as this theory assumes, effected 
on the basis of labor expended, but of money price, which is 
quite another matter. We might be able to produce iron at a 
far less expenditure of labor in Pennsylvania than in England, 
and yet not be able to sell it so cheap in the world's markets 
as England does. Some of the manufactures of iron, such as 
cutlery, axes and saws, are actually so produced through the 
possession of better machinery, but they have not yet driven 



THE ECONOMY OF LABOR. 211 

English wares of the same sort out of the market. A recent 
report to the British government asserts the same of many forms 
of American dry goods, yet they do not sell in Europe. " What 
makes the diflFerence in money cost ?" Many things, — the ex- 
tent and the method of taxation, the cost of capital, the rate 
of wages, the diflference in the purchasing power of money, and 
the like. 

Now, in view of domestic commerce, these elements of diflFer- 
ence have no existence. It makes no diflference to a country 
what is paid for an article of home production, provided there is 
no waste of labor in producing it, and provided there is a fair 
exchange of labor for labor. If tailor and hatter make an 
exchange of goods, whether they call the price a thousand 
dollars or one, is of no importance if only the values exchanged 
are equal. The standard of money payment, be it high or low, 
is the same for both. 

§ 204. (2) The theory assumes that the chief end of national 
as of individual economy is to save labor, whereas the great 
problem is how to employ it productively. If buying in the 
cheapest market reduce the amount of employment, it will be 
for the nation that does it the dearest of all buying. A farmer 
who spends his idle hours in making a sled might have got one 
at the factory for the price of wheat that cost him less labor; 
but he may have been wiser in making than in buying, because 
those idle hours would otherwise have been wasted. The nation 
that spends its surplus labor, — and every nation has a surplus 
of it, — in working up its raw material into goods is gaining by 
the business, even though it may employ that labor less eflfect- 
ively than another that has more experience and capital. The 
people of Denmark spend their long and bleak winters in spin- 
ning and weaving home-made goods that England would furnish 
them cheaper than they make them. The nation says, with one 
consent, through its national government, " we will not buy of 
you what we can make ourselves, for if we did our time would 
be lost." England herself is an illustration of what we mean. 
" If every man and woman and child returned as a worker in 



212 ELEMENTS OF POLITICAL ECONOMY. 

the census had full employment, at full wages, for forty-eight 
weeks out of the fifty-two, England would be a perfect Paradise 
for workingmen. We should be in the Millennium! Far other 
is the real state of afi'airs. Taking all the facts into account, I 
come to the conclusion that for loss of work from every cause, 
and for the non-efi"ectives up to sixty-five years of age, who are 
included in the census, we ought to deduct fully twenty per 
cent, from the nominal full-time wages" of the lower classes as 
a whole. 

See R, Dudley Baxter's National Income of the United Kingdom. (Lon- 
don 1868.) 

The problem thus presented is not an insoluble one for any 
country. It is the problem of the due balance of the three great 
elements of the industrial state. England has missed its solution 
chiefly through the rending the people away from the land, the 
establishment of a system of agriculture which lacks aggressive- 
ness and full productive power, and her consequent dependence 
upon foreign harvests. Millions of the English people who 
should be living by the land and owning it, sit prisoners in Eng- 
lish workhouses, or crowd the lanes and back streets of her 
manufacturing towns. Our danger is in the other direction — 
an undue development of agriculture and foreign trade to the 
neglect of varied industry. 

§ 205. (3) In adopting, therefore, a purely passive policy, we 
should not be accepting the natural order of things, but accom- 
modating ourselves to a thoroughly artificial order. The false 
position in which England finds herself compels her to wage war 
upon the industries of other countries; for us to sit idle and 
passive while she does so by means of the vast masses of capital 
concentrated in the hands of a few capitalists, would be as weak 
as to sit idle and passive while her fleet bombarded Boston or 
New York. The English ideal — forced upon them by their posi- 
tion — is that their country should be "the workshop of the 
world" and all other countries her dependencies. She is, in their 
view, "like a vast city to which the less peopled parts of the 
civilized world are an agricultural country, which is glad to send 



ENGLAND'S IDEAL OF COMMERCE. 213 

its overplus of provisions [of raw materials] in exchange for the 
luxuries and conveniences of a manufacturing region" (Thorold 
Rogers). "England's position is not that of a great landed pro- 
prietor, with an assured revenue, and only subject to occasional 
loss of crops or hostile depredations. It is that of a great mer- 
chant, who by immense skill and capital has gained the front 
rank and developed an enormous commerce, but has to support 
an ever-increasing host of dependants. He has to encounter 
the risks of trade and to face jealous rivals. . . . England is 
more favorably situated than any country, except the United 
States, for manufactures and commerce. . . . The future rise 
of the United States into a great manufacturing and naval 
power, appears the most probable and certain cause which will 
place a limit to our national increased prosperity" (Dudley 
Baxter). The United States and British colonies "are young 
and rising countries; industrres, as yet nascent, are thoroughly 
suited to the natural capacity of the region and of the people, 
the latter being of the same stock as the mother country, whose 
manufactures they prohibit or discourage. There is no reason, 
apparently, except priority in the market, why the industry of 
the old country should not be transplanted to the new" (Tho- 
rold Rogers). 

In other words, England having by a bad national economy 
destroyed the equilibrium of agriculture and manufactures at 
home, and thereby made herself dependent upon other peoples fcfr 
the supply of food and a market for her wares, must now do her best 
to prevent these new countries from attaining that equilibrium. 
If they attain it, that will " place a limit to her increase and 
prosperity," and unless emigration surpass everything that the 
world has seen, will produce first wide-spread misery and then 
domestic chaos. She must, therefore, use all her powers of 
capital and persuasion to keep off the evil day. Although she 
professes to believe, and persuades herself that she believes, in 
the solidarity of interests, and exhorts men 

From growing commerce loose the latest chain, 

. . . Till each man finds his own in all men's good, 

And all men work in noble brotherhood ; 



214 ELEMENTS OF POLITICAL ECONOMY. 

yet she cannot but see in this national growth of the industry 
of these new peoples an injury to her own well-being All 
English arguments and exhortations to passivity, however sin- 
cere, lie, therefore, under a just suspicion, as special pleadings. 
Facile homines credunt, id quod volunt. 

§ 206. (4) The commerce proposed by this theory is the 
exchange of the raw materials of some countries for the manu- 
factured productions of others. It is therefore an unfair ex- 
change, [1] one side pays for the transportation of bulky and 
costly articles over great distances ; the other pays for the 
transfer of goods of the same value but condensed in form. 
The burden of transportation, the chief tax upon production, 
falls therefore heavily upon the producer of raw material, 
lightly upon the manufacturer who exchanges with him. But 
as long as comparative cheapness is the one test by which an in- 
dustry must stand or fall, the prodilcer has no redress. He can- 
not say that he will sell to the nearer consumer and save the cost 
of transportation. His farming or planting may be a ruinous ex- 
haustion of the land that does little or nothing to fill his purse, 
but there is nothing else for him, so long as the foreigner can 
undersell home-made goods, prevent the establishment of fac- 
tories, and close those that have been established. 

[2] The exchange is unfair through the unequal distribution 
of risks. The producer of raw materials depends upon a 
thousand contingencies for his success, of which other producers 
know nothing. A bad crop or harvest may leave planter or 
farmer with nothing to sell ; a good one may overstock the 
market and pull wheat and cotton <so low that the cost of trans- 
portation absorbs nearly the whole price. But the manufacturer 
can foresee demand and adjust the supply to it, running his mill 
over-time at one period, under-time at another. The English 
distribution of functions thus assigns all the certainties to one 
nation, all the risks to another. 

§ 207. This contingency is the chief element in fixing the price 
of raw materials. Their supply vibrates between distant extremes 
of scarcity and plenty. Their producer' finds a great loss in 



"BUYING BACK THE TAIL." 215 

either. The manufacturer, through his larger power of adjust- 
ment to demand, can ordinarily avoid these ruinous extremes. 
The country that exports raw material is continually losing the 
fair returns of its labor through these variations, while it takes 
in pay goods at a price that is permanent and profitable to the 
manufacturer. Such a country is consequently a large exporter 
of the precious metals to pay for its importations. 

[3] It was an old and atrue jestof the manufacturing countries 
at the expense of those who supplied them with raw material and 
took manufactures in exchange, that these latter " sold the hide 
for sixpence and bought back the tail for a shilling." Take the 
case of a planter, who raises both cotton and breadstuffs for ex- 
portation, as the best illustration of the position of the whole 
country. His cotton is worth from ten to twenty per cent, more 
at the Manchester mill than when it left his plantation; so much 
has been absorbed by the cost of transportation, and of the whole 
bulk some ten per cent, is thrown out by the spinner as waste. 
His corn is worth four times as much in Manchester, being far 
bulkier in proportion to its value, and he has no means to raise 
its price above one-fourth of what it ordinarily sells for in Eng- 
land, as it then comes into competition with the harvests of 
England and the world. But it goes to feed Manchester work- 
people, and is therefore part of the raw material of the cotton 
goods that come back to clothe his family and his work-people. 
He buys it back in buying those goods, paying a dollar for what 
brought him twenty-five cents, and another dollar for what 
brought him eighty. And then, besides, he must pay the cost 
of bringing it back from Manchester to his plantation. He had 
better have employed people to spin and weave his cotton and 
consume his corn at home, even though their money cost were 
much greater than that of Manchester goods. For as he is both" 
a producer and a consumer, his interest is in the comparative 
price of the two classes of goods, not only in the cheapness of 
that which he buys. And if — as must be the case — a factory 
near at hand gives him, and the people dependent on him, a 



216 ELEMENTS OF POLITICAL ECONOMY. 

larger share of manufactured goods, it matters very little whether 
the money-price that he pays is great or small. 

[4] If there were no other reason for the policy that seeks to 
reduce foreign commerce to a minimum, a suflBcient one would be 
found in its effect upon the human material it employs. Bentham 
thought the worst possible use that could be made of a man was 
to hang him; a worse still is to make a common sailor of him. 
The life and the manly character of the sailor has been so 
adorned in song and prose, and the real excellences of indivi- 
duals of the profession have been made so prominent, that we 
forget what the mass of this class of men are, and what repre^- 
sentatives of our civilization and Christianity we send out to all 
lands in the tenants of the forecastle. How could they be other- 
wise, unless gifted with superhuman powers of resistance to 
temptation, since they are ordinarily shut out from all the 
humanizing and elevating influences of human society and its 
natural relationships ? 

And then, be it remembered, their work, while the most 
difficult, dangerous and severe of human employments, is also 
the most unproductive, the most useless. John Fitch's applica- 
tion of steam-power to navigation has rendered no greater service 
to mankind than this, of reducing the number of those who are 
required to conduct the interchanges of commodities between 
nations. 

§ 208. Domestic commerce, or the interchange of services ana 
commodities between persons of the same nation, is one of the 
bonds that Providence employs to bring every people into closer 
and firmer unity. It grows out of that differentiation of function 
that characterizes organisms of a higher order of life. It weaves 
across the country a web of intercommunication, binding part to 
.part in the bonds of mutual service and helpfulness. The national 
unity rests on deeper foundations (§ 23-25), but this is one of the 
natural expressions of that unity, which reacts upon and 
strengthens the unity itself It tends to produce that individu- 
ality of type in the part, which again produces the strong cohe- 
rence of the whole body politic. In every progressive nation 



TRUE AND FALSE COMMERCE. 217 

this domestic commerce is continually gaining in its amount and 
in proportion upon commerce with other peoples. Its people are 
continually more and more employed in serving and helping each 
other — less and less in servino' foreigners. 

. A nation that is declining in industrial coherence and inde- 
pendence grows faster in foreign than domestic commerce. Its 
people lose their diversity of pursuits, and conform more and 
more to a single type of character as of occupation, to the loss 
of true individuality. Their lines of transit run across the 
country in one direction, — to the seashore ; they are the warp 
without the woof of the web. That people are sinking to a lower 
grade of social organization ; the parts grow in likeness to 
each other, and their numbers, however great, are but the 
numerical repetition of a single specimen. 

The amount of a nation's foreign commerce is therefore the 
worst possible test of its general prosperity. A disproportion 
of this to domestic commerce shows that the nation is not self- 
contained and self-sufficient, but dependent upon other nations 
either for the supply of its necessities or a market for its labor. 
Yet the increased returns of exports and imports are often 
gravely offered in evidence of the beneficent effects of a cer- 
tain course of national policy. A fair test is to be found in 
the average consumption of articles of prime necessity per head 
of the population, which continually tells quite another story. 

§ 209, Every nation contains within its own providential 
boundaries the means of making itself independent of all others 
as regards the supply of articles of prime necessity. There is, 
therefore, no need of employing a large number of its people 
and a large amount of its capital in transporting those articles 
across the ocean. They are always of a bulky nature, and 
therefore manifestly unsuited for long transport. 

Legitimate and natural commerce moves rather along the me- 
ridians than along the parallels of latitude. It is the inter- 
change of the products of one climate with those of another. Its 
mission is to " mix the seasons and the golden hours" (Tenny- 
son), not to " carry coals to Newcastle" by bringing to each 



218 ELEMENTS OF POLITICAL ECONOMY. 

people the things that it could abundantly produce at home. 
From such natural commerce to "loose her latest chain" is the 
clear duty of every nation. 

Or, if we take commerce in the largest sense, as meaning the 
whole intercourse of nation with nation, it will include the inter- 
change of ideas, the naturalization of better political and indus- 
trial methods. And with this intellectual interchange there 
would naturally be associated a commerce in those articles 
whose artistic excellence and elaboration of workmanship cause 
them to present in a concentrated shape the very flower of the 
producing nation's intellectual life and spirit. 



CHAPTER ELEVENTH. 

The Science and Economy of Manufactures — The 

Theory. 

§ 210. The progress of the industrial state, as of every other 
organized society, and indeed of organic life as a whole, is in the 
transition from the simple to the complex, from the state in 
which the parts resemble each other and the whole organism, to 
that in which the diflference between the parts, and between the 
whole and the parts, is as great as possible. " As we see in ex- 
isting barbarous tribes, society in its first and lowest forms is a 
homogeneous aggregation of individuals, having like powers and 
like functions ; the only marked difference of function being 
that which accompanies the difference of sex. Every man is 
warrior, hunter, fisherman, toolmaker, builder; every woman 
performs the same drudgeries ; every family is self-sufficing, and 
save for purposes of aggression and defence, might as well live 
apart from the rest" (Herbert Spencer). 

With the advance of society, this uniformity disappears. 
From being '' Jack of all trades and master of none," each 
member of the community confines his attention to a single pur- 
suit, and does that one thing better and more effectively. Me- 
thods of work improve ; a smaller number of workers and a less 
amount of labor is required to raise food for the whole commu- 
nity. The rest are gradually set free for other employments, 
some to tan skins into leather and make shoes; others to turn 
wool into cloth and make clothes; others to dig up iron and 
smelt it for tools, agricultural implements and articles of house- 
hold use ; others to mould clay into pottery or bricks, or quarry 
stone for houses ; others to cut down trees and fashion them into 
furniture and other wood-work. Each of these trades, as the 
numbers of society and the consequent demand for their pro- 
ductions increase, is capable of continued subdivision of labor. 
The tanner ceases to make shoes, the carpenter to cut down 

219 



220 ELEMENTS OF POLITICAL ECONOMY. 

timber, the weaver to spin his yarn or to fashion his cloth into 
garments. And at every subdivision of function, the efficiency 
of the workman and the skill demanded of him are increased. 
Arkwright, the Lancashire barber, may or may not have in- 
vented the spinning-jenny, but he stamped his name on the his- 
tory of industry when he devised the first factory, and taught 
the North of England weavers and capitalists to substitute coope- 
ration as regular as clock-work for desultory and wasteful work. 

§ 211. Every change of this sort is a real gain to society at 
large and to each member of it. The members of the nation 
who had before no need or less need of each other, become more 
helpful and useful to each other. The farmer findfe, with the 
artisan within reach, a ready market for his produce. He can 
buy with its price plenty of clothing, utensils and furniture, — 
plenty of the things that add to life's comfort and take away its 
sordidness. He can purchase improved implements that make 
his work easier and more fruitful. He is more closely associated 
with his fellow-citizens than before ; every wise purchase or sale 
that he makes is an interchange of services, by which both par- 
ties are benefited. There is a real and growing harmony of in- 
terests between all classes; the advance of either in wealth 
enables the others to find a better market for what they would 
sell; and as wealth leads to the expenditure of larger capital 
and thus to more productive work, the prosperity of each enables 
the other to buy of it to better advantage. 

§ 212. The growth of the power of association is, at the 
same time, growth in individual freedom. The more closely 
men are thus united, the more free each one is to give full play 
to the bent of his own character. He is not forced to make his 
living by an employment for which he may have no taste, and in 
which he can therefore never use his natural gifts to the best 
advantage. He can consult his liking. And men's employ- 
ments and daily industries react powerfully upon general char- 
acter; variety of work produces and cherishes individuality. 
The parts of the body politic grow in diversity from each other 
and from the whole body ; the societary type rises with that 



THE NATURAL GROWTH OF INDUSTRIES. 221 

growth. The unity of the parts in the whole becomes all the 
stronger for the difference. The body is " fitly joined together 
by that which every part supplieth," when no part can say to 
another : " I have no need of thee." 

All history illustrates this growth in social unity, through 
growth in individuality. Spain proscribed individuality and 
freedom; her only philosophers were, like St. Theresa and 
Ignatius Loyola, those who taught the absorption and annihila- 
tion of the man in the corporation ; the consequence has been 
a growing lack of vital cohesion and unity in a monarchy that 
once aspired to universal empire. Germany was riven into 
fragments by feudalism, but her individualistic philosophy, whose 
first word is " I am I," has gone hand in hand with her indus- 
trial progress, in binding her into a compact and vigorous em- 
pire. 

See Prof. F. D. Maurice's Lectures on Social Morality. 

§ 213. This industrial growth is the natural course of all pro- 
gressive societies. They grow more diversified in their work, 
if the constitution and course of their nature be not interfered 
with. Were there no possibility of interference, the whole pro- 
cess might be left to nature, except so far as legislation is needed 
to restrain those who are unwilling to give justice to the rest. 

Interferences, however, do arise ; some from within, some 
from without. Unjust laws, artificial panics, badly imposed or 
excessive taxes, unwise economy of labor, restrictions on home 
trade, the currency of doubtful money and false theories, the 
absence of general education and intelligence, and many other 
things already adverted to, prevent the industrial community 
from going forward as it might. To remove all such restrictions 
must be among the first duties of the statesman as an economist. 

§ 214. But interferences come from without also. Sometimes 
these grow out of wars and conquests, as when the Philistines 
would not allow the Israelites to carry on the trade of the smith, 
lest they " should make them swords or spears," and he who 
needed a smith's help had to go down to Philistia. At others 
they grow out of the state of dependence in which one country 



222 ELEMENTS OF POLITICAL ECONOMY. 

stands to another. Colonies have been continually cramped and 
held back, that they might contribute to the profits of industry 
in the mother country, rather than develop a native industry of 
their own. In 1827 Mr. Huskisson of the British ministry 
told our Minister " that it was the intention of the British gov- 
ernment to consider the intercourse of the British colonies as 
being exclusively under its control, and any relaxation from the 
colonial system as an indulgence, to be granted on such terms as 
might suit the policy of Great Britain at the time it was granted." 

§ 215. But without the employment of either military force 
or political domination, it is possible and not unusual for one 
country to keep another in a state of industrial dependence and 
check its growth. Were all countries equal at the start and 
sure to remain so, this could not happen. If they had all the 
same command of capital, had they all equal skill and intelli- 
gence, were they all subject to the same taxation, then any 
aggression could be but temporary and would be punished by 
equal loss in some other direction. But this is by no means the 
actual state even of the nations called civilized. No two of 
them have reached the same point in industrial development, 
some are far ahead, because of an earlier use of natural advan- 
tages; others lag far behind, though they are striving with all 
energy to come up. 

Suppose, now, that two nations that differ thus should estab- 
lish full and free commercial intercourse between each other, 
what will be the necessary effect ? At first sight it might seem 
that the rich nation would be conferring benefits upon the poorer 
one, which the other could but feebly return 3 that the difference 
between them would be gradually and steadily diminished 
through the poorer nation coming forward in industrial develop- 
ment, and taking an ever higher place, and that more rapidly 
than before. 

But experience shows that just the reverse of this is the case. 
The rich nation becomes, for a time at least, richer by the ex- 
ctiange ; the poor nation permanently poorer. The former, 
through its command of cheap capital, and, by consequence, its 



DOCTRINAIRE OBJECTIONS. 223 

greater division and efficiency of labor, can continually undersell 
the latter in whatever it chooses to export to it, for it can send 
it manufactured goods at prices with which the manufacturers 
of the other cannot compete. The process of accumulating 
capital in the poorer country is decisively checked ; its people 
are reduced from what variety of industry and mutual exchange 
of services they had possessed, to a uniformity of employment in 
which no man needs or helps his neighbor. Their power of asso- 
ciation is destroyed ; money, the instrument of association, is 
drained out of the country. Nothing is left them but the pro- 
duction of such raw materials as the richer nation chooses to 
buy, and how unprofitable a commerce of that sort is, we have 
already seen (§ 206). The country steadily declines in all the 
elements of productive power, even in the character of the 
single home industry that is left it (§ 92). " From him that 
hath not" is " taken away that which he seemeth to have." 

§ 216. Here a sweeping objection meets us. A number of 
theorists tell us that " even if this be the result of unrestricted 
trade between two such countries, the weaker has no lawful 
power to put a stop to it. The sphere and duties of government 
do not extend to the direction and regulation of industry. It 
might as well undertake to tell its people what they are to 
believe, as to tell them what they must make, and where they 
must buy. The right to exchange one's property wherever one 
pleases, is a part of the right of property itself. It is robbery 
of the individual citizen, therefore, to say that he shall so man- 
age his buying and selling as to foster a native rather than a 
foreign industry." " I assume," says Prof. Thorold Rogers, 
" that there are such rights as are called natural, and that these 
are the inalienable conditions under which individuals take part 
in social life. No one questions the natural right of free ex- 
change." ' 

This notion rests on the old exploded fiction that men passed 
out of a state of nature into the social state by a social contract, 
in which so much of their natural rights as were necessary to 
the being of society were given up, and all others were 



224 ELEMENTS OF POLITICAL ECONOMY. 

retaioed. But, as already stated (§ 23), natural rights of indi- 
viduals have no existence in any real sense except in society 
itself, and wherever the well-hein^ of society demands it, they 
must give way. It rests with the recognised authorities of the 
nation, those through whom the national will expresses itself, to 
say how far this is necessary, and when that decision is made, 
no one has a right to complain of spoliation. Else it would be 
the moral right of every citizen to refuse to pay school-tax, or a 
fax for any other purpose that the bare existence of the state 
did not involve. 

This theory would introduce the most utter slavery, the des- 
potism of the individual will, under the plea of liberty. It 
would give to every individual in the state the liberum veto, by 
which Poland was ruined. It would leave no choice with any 
nation but to follow a policy of inaction that would expose its 
people to the utmost suffering, and ultimately lead to the 
destruction of the bonds of society. And even if there were not 
one dissenting voice within the nation itself, still the unanimity 
could take no effect for lack of a proper organ for its expression. 
The uncertain agency of voluntary leagues and associations 
would be the only means, — a means altogether insufficient, — to 
carry out their purpose. When the sense of national necessity 
was clear and strong, the people would abide by such voluntary 
decisions, but in more ordinary moods they would begin to say : 
" What matter will it make if I buy this of one man, and not 
from another ? It is but a drop in the bucket after all." Now 
the very function of the government is to express and embody 
the higher and purer will of the people, and not their lower, 
self-indulgent moods. The great and true ruler is the one who 
can distinguish between the two, and direct his policy ac- 
cordingly. 

The fragment of truth which gives this error all the validity 
that it has, is that the government, as a rule, is concerned with the 
industrial (as with the intellectual) life of its people indirectly ; 
with some other provinces directly. It is, as the preamble of 
the U. S. Constitution very well expresses it, to ^^ provide for 



•'promote" and "provide." 225 

the common defence" but to ^^ promote the general welfare." 
Theorists who run to the other extreme would have government 
take as much charge of the one sphere as the other. They 
would substitute national workshops, for those of individual 
employers. They would put the rights of property under great 
restraints or abolish it utterly. But as the government is not 
the power that propels the ship of state, but the helmsman 
(^giibernator) that steers it, this extreme is as false as the other, 
while it grew out of the other by a necessary reaction. Well 
did Edmund Burke say that to draw the line between what the 
state should do as such, and what it should leave to the activity 
of individuals, is one of the nicest questions in legislation. 
These sweeping and wholesale solutions of it, just because of 
their simplicity and directness, are under suspicion as false. 

Another form that the objection takes is this : " The state should exact 
a tax from no man unless it be made payable into its own treasury and 
used for its own ends. But the difference between the price of the home- 
made article and that at which the foreigner would have provided it is 
such a tax ; therefore it is unfair." In other words the state has no 
right to jo?-o;Ho/e but only to provide for things and actions needful to 
the nation's life. 

§ 217. In the state, therefore, inheres the right to promote 
the industrial development of the people, as necessary to their 
" general welfare." And the right is no less than a duty. If 
it be the first duty of the nation to provide for its own existence, 
there is involved in that the duty to promote the largest and full- 
est existence possible, the free development of all sides of the 
national life. If the state exist that justice may be done, that 
justice is not to be conceived merely in the jural sense ; as the 
popular phrase extends its application, the people must be 
allowed " to do themselves justice," and all obstacles to that 
end must be removed. If the state exist that freedom may be 
attained and realized for its people, then it must make such 
provision that its people shall possess real industrial freedom, — 
the freedom of neif^hborhood commerce and mutual service with 
each other. It puts restraint upon the international trade, that 
the far more important domestic trade may exist and be free. 
15 



226 ELEMENTS OF POLITICAL ECONOMY. 

^' But are not its citizens at all times free to trade wherever 
they please, without its interference? If they think it best to 
buy of the home producer they can do so." 

They are not free, if no one can undertake to produce what 
they need at home, for want of assurance and security. In such a 
case the right and natural thing is for the people to say, through 
their organ, the government, " Go ahead ; build your factory ; 
put in your machinery ; we will buy of you/' In so saying 
they are acting out their own freedom of choice to the fullest 
degree. They are saying, " We choose to have a free choice 
between the home and the foreign maker, and so we pledge 
ourselves that the former shall have a chance to establish him- 
self." All freedom is won by sacrifice ; the wise and far-sighted 
people is the one that will make the sacrifice — that will sufi'er 
the pains of a bloody revolution, as more endurable than the 
long, wasting misery that centuries of tyranny inflict. Such a 
principle will not be left out of sight when such a people enters 
the work-shop and the factory. 

A writer in the Fortnightly Review (London) says : " An observant 
journalist has remarked that it is a singular fact that in Austria 'those 
who have vigorously struck down every ecclesiastical and political 
monopoly throughout the empire are the most vehement advocates of a 
restrictive commercial policy, while on the other hand those who are in 
favor of free trade are the most ardent supporters of ecclesiastical 
privilege.' Austria is not singular in this respect. In France the ad- 
vocates of free speech and a free press are restrictionists ; while im- 
perialists, as a rule, are free traders. In the United States the abolitionists 
or Republicans are avowed restrictionists, while the Democrats are de- 
cidedly in favor of free trade. Precisely the same phenomenon may be 
observed in the British colonies. In Canada, Australia and New Zealand 
the party of progress has always been identified with a restrictive com- 
mercial policy, while the Conservatives are the most uncompromising of 
free traders. Indeed, it may be said that one-half the entire English- 
speaking race are, in one shape or another, in favor of a restrictionist 
policy, and of this half the great majority are advanced liberals. It is 
the national creed in the United States, Canada, and the leading Australian 
and New Zealand colonies. . . Strange as it may appear, it is neverthe- 
less true that it is just because the party of progress in the colonies are 
opposed to monopoly in every shape that they are the advocates of re- 
striction in regard to commerce. Instead of that policy savoring of 
monopoly, they maintain that it has exactly the opposite tendency ; and 



IN PEACE PREPARE FOR WAR. 227 

their chief object in imposiDg import duties is to put down monopolies, 
by extending the sphere of competition." 

§ 218. No violent transition from the sphere of the state's 
direct duties is needed to carry it into this of its indirect in- 
fluence. Indeed, it cannot discharge the former without exer- 
cising the latter. It must make large purchases or manufacture 
in its own workshops large supplies for the army, navy and other 
executive branches (§§ 297, 302). In either case the choice 
between home and foreign industry is forced upon it. If it 
raise large sums by indirect taxation, it must select the method 
of imposing these, — whether by excises upon home productions 
or duties upon those of other countries. 

Its provision for its own safety in case of war involves the 
cherishing of such industries as furnish the great necessaries of 
national use, and indeed requires their creation. " In time of 
peace be prepared for war" is a commonplace of statecraft. Now 
in war the government is of necessity a large purchaser of many 
sorts of manufactured goods. Foreign commerce is interrupted, 
either entirely or so much so as to render the importation of 
these goods — which are contraband of war — difl&cult and hazard- 
ous, and on a large scale impossible. The home manufacturers 
that might have supplied them cannot spring up in a night. 
The narrowness of vision, the lack of foresight, which prevented 
their being called earlier into existence, has its reward in na- 
tional perplexity, often in actual defeat. 

" How then is it," says Dr. Horace Bushnell, " that free trade 
science is going peremptorily to settle all the great questions of 
public economy ? For if we set ourselves down to it as the test 
of economy, and say it is final, we are by and by obliged to ask : 
Is there nothing to be done or thought of in the world that is 
out of 'economy,' and rightly spurns it? May not the worst 
* economy ' sometimes be the best ? To be fostering modes of 
production when the trade-balance shows a disadvantage wears a 
bad look certainly as respects the matter of economy. But how 
many and vast supplies are .wanted that must not be left to the 
uncertainties of trade, — where to higgle over expense would be 



228 ELEMENTS OF POLITICAL ECONOMY. 

even a contemptible weakness ? This is true in particular of all 
the supplies that are needed for the equipment of the state of 
war. Without these no people is a proper nation, or at least by 
any possibility a strong one. These, therefore, we must not 
only have, but must have the way of making at any cost." 

See Seribner's Magazine for July 1871, article on ^'Free Trade and 
Protection," 

219. It is sometimes urged as an argument in favor of unre- 
stricted trade, that " the mutual dependence of the nations thus 
produced is eminently promotive of the cause of international 
peace. It will put the nations under bonds to keep the peace, 
by placing each of them in such a relation to the rest that a 
war with any other will inflict ruinous losses upon its industries, 
and therefore it will create within each a sentiment in favor of 
peace^ and a class whose interests are bound up with its preser- 
vation." 

An unhappy comment upon this rose-colored theory is found 
in the fact that the majority of modern wars have been under- 
taken, not for national honor or pride, but for the sake of trade, 
— " the fair, white- winged peace-maker." The communities most 
at war with the rest of the world have generally been those in 
which the spirit of trade predominated — Tyre, Carthage, Venice, 
England, &c. A great English military historian and general, 
Sir W. Napier, lays it down as a rule that the traders have 
begun the wars and the soldiers have ended them (See §§ 257, 
278, note). 

Furthermore, this argument assumes that war in and of itself, 
is the chief thing to be avoided in international affairs. It 
leaves out of sight the truth that a just and righteous war may 
be the clear vocation of a nation, and the preparation for it the 
very highest duty. If unrestricted trade unfits a people for the 
infliction of just punishment upon unrighteous nationalities, it 
unfits it for one of the very highest ends for which nations exist; 
— unfits it for rendering to other nations the very highest 
service possible, — the defending them against the unjust 
invasion of their rights, or the chastising them into a better 



OUR FINANCIAL METHODS. 223 

state of mind. Such cases, do, undoubtedly, exist ; but they are 
exceptional, and not happy exceptions either. Europe has no 
more pitiable spectacle than the sight of a nation foremost in 
wealth, culture and capacity for just and impartial indignation, 
yet bound hand and foot by trade motives, forswearing its better 
instincts, deserting its natural allies, and held back from ex- 
erting its just influence upon the world's politics. 

Furthermore, the eflfect of such unrestricted commerce is to 
place the weaker and less developed of the two countries at the 
mercy of the other. The dependence is never fully mutual and 
equal, and in the nature of things cannot be. The one is fully 
provided with all the munitions and appliances of war ; the other 
has all these to seek. Hence the rule of international law now 
coming into recognition, that neutral nations are bound to strict 
(not merely to impartial) neutrality, as the weaker of the two 
nations at war will derive more benefit than the other from the 
power of making unreserved purchases on neutral soil. This 
fact of the unprepared state of the more backward country can- 
not be hid from the other; in case of a disagreement, it furnishes 
a strong motive to overbearing insolence and aggression. It has 
been repeatedly alleged as a motive for rushing into hostilities, 
never for holding back. 

§ 220. A comparative study of the financial methods of dif- 
ferent nations discloses circumstances that render discrimination 
in favor of the home manufacturer the only fair mode of pro- 
ceeding. One country makes efforts to be rid of the burden of 
debt, and to that end imposes a heavy direct or indirect taxation 
upon its people; another funds its debts in perpetual annuities, 
and has no intention of paying more than the interest. One 
country has adopted a very eflficient but expensive system of gov- 
ernment by paid and responsible oflBcials ; another possesses and 
employs a large class of men of wealth and leisure, upon whom the 
work of legislation and the local administration of justice can be 
devolved. One country has a very high ideal of the duties and 
responsibilities of government, and considers the health and in- 
telligence of the people its charge, and taxes all property-owners 



230 ELEMENTS OF POLITICAL ECONOMY. 

accordingly ; another leaves these matters to the care and in- 
terest of individuals. One country expects in all its people a 
certain degree of civilization implying a corresponding expendi- 
ture for fitting habitations, clothing, food, education, &c., and 
thence an adequate scale of wages to support this expendi- 
ture; another country is satisfied to see large masses of its 
population but slightly raised above the brutes, and toiling 
for a pittance. One country extends over a vast and sparsely- 
settled territory, and this fact adds to all the national ex- 
penses ; the other has a small territory with a compact popula- 
tion. One country, through force of circumstances, has been 
compelled to ask very great sacrifices of its people for the 
national safety and defence ; the other has long dwelt at peace. 
Any one or more of these circumstances make it just and fair 
to compensate for the weight of home burdens by duties high 
enough to give the home manufacturer a fair chance. Nothing 
could be more unequal than equality of duties in such cases. 

These things are not superficial matters that may be adapted 
to the economic teachings of every new set of economists. The 
national methods of finance are the expression of the nation's 
life ; their peculiarities are the expression of that in the nation's 
life which gives it individuality and historic distinctness. They 
need continual and steady reform, that they may be kept up to 
the national standard of right, and the national average of intelli- 
gence. But reform is not revolution; it is evolution rather. 
In these things there is for every nation a "constitution and 
course of nature," whose laws must be learned and followed in 
wise change and in wise resistance to needless change. 

For these considerations the cosmopolitical school have no 
place ; they think their consideration in connection with the 
question of wealth and economy an impertinence. They write 
as if there were no nations, or as if they were merely local and 
conventional arrangements for police purposes. With Cobden, 
they would gladly see all boundary lines wiped from the map ; 
and like him, they regard nations as necessary evils. Their 
arguments are never based on the necessities of national life, 



TARIFFS AND THEIR METHODS. 231 

and the means to attain the largest and fullest degree of that 
life; but on " the maximum of production throughout the 
world." They know of no interest save pocket-interest, whereas, 
as Mr. Mill well says, a man's interest is whatever he takes an 
interest in. And every good citizen will take an interest in the 
industrial development and independence of his own country. 
We might, as Dr. Bushnell does, concede the force of all their 
economic arguments, and then reject their conclusions on higher 
grounds. 

So much for arguments drawn from political theories and the 
replies to them. From these we pass to the purely economic argu- 
ments in favor of restrictions upon foreign trade ^ and first to 
those that would justify the imposition of those restrictions per- 
manently., if need were. But first of all as to the methods of 
restriction. 

§ 221. The state, then, possessing the right to discriminate 
between home and foreign industry, and being prompted to do 
so by reasons of public policy as well as by a desire to promote the 
welfare of its citizens, has to make a choice of the best means 
to that end. It might directly encourage the worker at home 
by a system of bounties and subsidies; but this plan is now 
generally rejected as too artificial, and as open to great abuses. 
Or it may prohibit the importation of foreign wares, or discour- 
age their importation by duties that will raise their price high 
enough to enable the native manufacturer to compete with them 
in the home market. Prohibitions are now properly regarded as 
unwise ; discriminating duties are adopted as preferable by nearly 
all civilized nations. 

Another question of method is the choice between specific and 
ad valorem duties. The former exact so much for each pound, 
yard's length or square foot of all goods of a given kind, with 
no reference to their comparative fineness or value. The latter 
taxes each class of goods a certain percentage on their sworn 
value. The specific form of duty is preferable, (1) because its 
proper amount is most easily and surely ascertained. It enables 



232 ELEMENTS OF POLITICAL ECONOMY. 

government to dispense largely or altogether with *' Custom- 
house oaths ;" renders false invoices as good as useless. (2) 
Because it gives the largest protection to the manufacture of 
those cheaper and bulkier articles which are of prime necessity 
to the nation. It thus furnishes a primary school of industrial 
education, in which the working classes and their captains of 
industry learn to make cheap things before they attempt those 
that require finer elaboration. (3) It diminishes smuggling. 
To bring in goods without paying duty requires a degree of con- 
cealment that is impossible in the case of the coarser wares; 
while the smallness of the duty upon the others, in comparison 
with their cost, makes it not worth while to run the risk of 
detection. (4) It does not, as ad valorem duties do, intensify 
the fluctuations in the price of an imported article, by admitting 
it at a low duty when it is cheap, and imposing a higher duty 
when it is dear. Especially in times of crisis and distress, when 
an industry is ready to perish, it does not, as ad valoreTvi duties 
do, invite foreign rivals to complete the ruin, by allowing their 
goods to enter almost duty free ; but by its unvarying defence 
against such assaults revives the fainting industry. 

§ 222. Protective duties yield for a considerable period a 
large revenue to the state, but that is not the object of their 
imposition. Duties for revenue, i. e., too low to be protective, 
in spite of their appearance of moderation, are highly unjust. 
They inflict all the hardships of indirect and unequal taxation, 
without even the purpose of benefiting the consumer. Duties 
for protection, while they bring large revenue, have another 
purpose, and, as we shall see, benefit the consumer to a far 
greater extent than they tax him, while their amount is equally 
available for public uses. Their object is their own abolition, 
for they aim at such a development of the national industry as 
shall render impossible the importation of the dutiable articles. 
To impose revenue duties is to accept indirect taxation as a 
permanent method of finance ; to impose protective duties 
is not. 

§ 223. It would, of course, be absurd for a young or a poor 



THE INCIDENCE OP DUTIES. 233 

country to begin at once the production of everything that her 
people need. The limited amount of her capital and of her 
labor would not allow of this. Those coarser articles whose cost 
of transportation is great, and which a specific system of duties 
will do most to exclude, should be the first object; afterward 
those that are finer. 

But even classes of goods that are under very heavy duties 
will continue to be imported for a good while. It will ordinarily 
take the lifetime of two generations to acclimatize thoroughly a 
new manufacture, and to bring the native production up to the 
native demand. It is from such imported goods as these that 
the customs' revenue is derived ; and they will sell at a higher 
rate than before the duty was imposed. The very object of the 
duty was to raise the price of the foreign article ; if it failed to 
do so, it would offer no protection. But it is a great mistake to 
suppose that such articles will sell for their old price plus the 
duty. A part of the burden will fall on the foreign producer 
and the importer. The amount of it that they will have to pay 
will generally be proportional to the amount of home production. 
When such duties are first imposed and the amount of native 
competition is very slight, nearly if not quite the whole of the 
duty is paid by the consumer; but the amount thus paid dimin- 
ishes steadily as home production increases, and when the latter 
is nearly up to the home demand nearly if not quite all the duty 
will be paid by the importer and the foreign manufacturer. 
Hence the outcry raised by these two classes against protective 
duties ; it is not from love of the consumer, nor yet from jealousy 
of the profits made by the native manufacturer, but from an un- 
pleasant consciousness that through his efforts the amount of 
revenue that they are furnishing to the government is steadily 
increasing in proportion to their whole business, and to the re- 
duction of their profits. 

Here are two bits of information and confirmation from British trade 
circulars. A Sheffield steel firm says : " We have a very large steel trade 
in America, amounting to a large proportion of our whole business, and 
in that market there is, from various causes, much competition ; and 
these two causes, large trade and competition combined, have induced ub 



234 ELEMENTS OF POLITICAL ECONOMY. 

to be satisfied with a smaller average of profit there than we have real- 
ized on the average in our other markets." A London iron firm explains 
to its producing customers : " With the present out-turn, a material re- 
duction of the American duty, or something equally significant, is 
necessary to advance the price of iron above £7 a ton." The very threat 
of a protective duty, i. e., the threat to foster native production and com- 
petition, has often had the effect to lower the price of the foreign article. 

There are some very evident inferences from this fact. (1) 
The amount of a duty is not always nor often the same as the 
amount of the protection it offers. If the duty be seventy-five 
per cent., and the foreign manufacturer pay fifty per cent, of it, — 
i. 6., if he sell his goods only twenty-five per cent, higher than 
before it was imposed, then the protection afforded is twenty-five 
per cent, and no more. Allowance, therefore, must be made for 
this fact in imposing protective duties. A duty is protective in 
intention when its object is to promote. home production; it is 
protective in effect, whether it be low or high, when it does 
raise the price of the foreign article sufficiently to give the 
native producer a chance in the home market. It must there- 
fore be so high that the foreign producer and his agents cannot 
pay it, and still have a sufficient profit on sales. 

(2) Nothing, therefore, can be more misleading than some of 

the wooden calculations made by the opponents of protective 

duties. They reckon up the entire consumption of the home 

made article, and calculating — in the case supposed — that it sold 

for seventy-five per cent, more than . the foreign article would 

have cost had there been no duty, they assume that the vast 

sum thus reached went into the pockets of native manufacturers, 

and was " taken out of the pockets of the consumer." 

For another false assumption in such calculations — the assumption that 
the home producer does or can charge up to the amount of the protection 
he receives — see ^ 241. Henry Clay used to tell a story of a Free Trade 
orator haranguing from the stump a crowd of Kentuckians. " Do you 
know, sir," said he to an attentive hearer, " that that coat on your back 
cost you a half a dollar a yard more than it need, because of this accursed 
tariff?" " Wal, stranger," was the reply, drawled out slowly, " I reckon 
it must be so since you say it. But this coat cost me by the yard just 
three bits" (three-eighths of a dollar). 

(3) The notion that unrestricted commerce gives each nation 



THE ECONOMY OF LABOR. 235 

simply all the possible advantage that it can reap from the more 
advanced industries of others, and that nothing but a fair profit 
can be added to the cost of production and transportation, is 
utterly untenable. Were this the case, the entire duty would 
fall on the consumer from first to last. But in fact, the money 
received into the treasury is very largely drawn from the trader's 
excessive profits, and not from the consumer in any sense. 

The benefits reaped hy a nation from a restrictive policy may 
he considered under four heads. 

§ 224. Firstly, it is a wise economy of the labor of the people. 
Now the national economy of labor consists, not in getting on 
with as little as possible of it, but in finding remunerative em- 
ployment for as much of it as possible. If labor be the source 
of wealth, — and this is one of the few points on which all are 
agreed — then that country must advance to wealth which has work 
for all who are willing and able to do it. To find work for all is 
one of the greatest problems that a nation has to solve ; none has 
yet attained to a complete solution of it; but none is so far from 
its solution as the country in which agriculture is the only em- 
ployment open to the great mass of the people. For farming, as 
a rule, furnishes employment only to robust men and in the 
open air; all others — women, the young, the sickly — are left in 
idleness and dependence upon the farming class. 

In districts of our own country, especially in the South, 
where agriculture is the only industry, a considerable portion of 
the people live on the verge of starvation for want of work. 
Maine was a by-word for poverty sixty years ago, when her 
people were either farmers or lumberers. Since she began to 
use her immense water-power, she has left many other states 
behind her, and has now work for all her people. Australia is 
a young country, with plenty of land, large natural resources, 
and no excess of population, and but a small percentage that are 
incapable of hard work. Yet she has been greatly perplexed to 
find employment for that percentage, especially for the young. 
A highly-respectable farmer from Ulster, who went thither about 
1840, could get nothing for his boys to do, and actually made 



236 ELEMENTS OF POLITICAL ECONOMY. 

sailors of them to save them from idleness and worse. For this, 
among many good reasons, most of the Australian colonies foster 
home industries by restrictions on foreign trade. 

The greater the variety of the industry the more the demand 
for labor and the better the laborer is paid ; for instead of two 
workmen competing for every job, we shall have two masters, two 
sorts of masters running after every workman. " There is rarely 
competition for labor on the part of employers within a trade, in 
a particular place, unless there be competition for it from with- 
out. And in the absence of competition from without, what 
competition there is on the part of employers within a trade 
often tends to lower wages " (Cliffe Leslie). Thus in the north- 
ern and eastern shires of England, and the three north-eastern 
counties of Ireland, work is far better paid than in the other 
parts of those kingdoms, because in those agriculture and manu- 
factures are competing for labor, while elsewhere there is little 
or nothing else than agriculture. So also in the Walloon pro- 
vinces of Belgium, as compared with the Flanders provinces. 
In the latter farming has been brought to perfection, but indus- 
tries exist only on a petty scale, for want of coal and water- 
power, and there is a considerable amount of misery. In the 
Walloon provinces farming is backward in comparison, but great 
industries abound, wages are nearly twice as high, and pauperism 
exists to hardly any extent. The notion that labor will in such 
cases transfer itself from the worse to the better market, is not 
borne out by the facts. The wrench of separation from familiar 
surroundings is terrible to the uneducated workman, and not 
very agreeable to any one. If it be made at all, generally a 
more distant field offers a still better prospect, and the man emi- 
grates. The transfer around the world is easier than from shire 
to shire. Besides, the laws of many countries discourage the 
latter transfer, and tend to reduce the laborer to the condition 
of a serf, adscriptus glehse. 

§ 225. We sometimes hear it said in reply : " Skilled artisans 
are as Well off in England under Free Trade as in America 
under Protection. Their week's wages will buy them more 



PROTECTION MODIFIES LABOR. 237 

broadcloth,' Sevres china, fine cutlery, &c., than it would in 
America." They ought to be much better off; a country that 
possesses the vast capital that England has, and can carry the 
organization of labor to the perfection it has there reached, 
should pay her workmen at rates with which the rest of the 
world could not compete. We ought to see a growing scarcity 
of skilled labor in America, through the emigration of our 
artisans thither. But, in fact, vre find our workshops and 
factories full of her workmen, and an immigration of them to 
America since the restrictive policy was adopted, such as there 
never was before. 

But all this is besid^ the question. The question is not be- 
tween free trade and protection, but between the varied industry 
which England acquired by long persistence in protection, and 
which she will retain under any system, and the want of it, from 
which we can only be saved by following England's example 
rather than her precepts. 

§ 226. Furthermore, the creation of a diversified industry 
introduces such a change into farming itself as enables the farmer 
to employ a greater variety of labor. A home market takes the 
place of the distant one, and crops are grown which require more 
care and attention, but repay it with larger profits. Farming 
passes out of its wasteful extensioe phase into the intensive stage, 
in which its operations are more productive and profitable. And 
this " mixed farming" which pays best all the world over, is as 
varied in the sorts of labor it employs as in the products of the 
labor. Women and children can now be employed, as physical 
strength and endurance are no longer the sole requisites. 

§ 227. Labor is benefited by the restrictive policy in that 
the increase of its productiveness, and consequently of its re- 
muneration, is thus made possible. We have already seen the 
natural progress of the workman from wasteful, thriftless, me- 
chanical, ill-paid work, to that which brings the whole man into 
service, mind as well as muscle, and uses all his powers to the 
best advantage We have seen that while both capitalist and 
laborer are benefited by the transition, the laborer receives the 



238 ELEMENTS OF POLITICAL ECONOMY. 

larger share of the benefit, and the power of labor to command 
the services of capital (of the accumulations of past labor, that 
is) grows steadily with the growth of society, A country that 
remains chiefly agricultural calls only for the lower, and lower- 
priced, sorts of labor ; that which diversifies its industry creates a 
demand for those sorts that rank higher in their demands upon 
human capacity and in their rewards to industrial ability. It is 
therefore the interest of the laboring classes, even more than 
of their employers, to see to the naturalization of all the indus- 
tries for which the country has any natural aptitude. 

This argument has especial force as regards the people of the 
United States. The natural drift and bent of the American 
character towards the mechanic arts and the inventions that 
facilitate them, which a morning in the U. S. Patent Office 
would make clear to any one, would find little or no vent in the 
absence, or the undue subordination of the manufacturing in- 
dustries. The strongest side of the national intellect and the 
brightest gifts of the people would be thrown into the shade. 

A comparison of our manufacturing cities and districts with 
the city of New York and its working classes, discloses the fact 
that wealth is far more evenly distributed where industry is varied. 
In Philadelphia and Pittsburg, or Cincinnati, for instance, there 
are very few very rich men, and the process of accumulating 
large fortunes is a slow one. But more of the people own 
their own houses in Philadelphia than in any other city of the 
world. The working men of those cities, many of whom are 
foreigners, are generally well ofi" and contented with their lot. 
They, too, have a stake in the stability and security of society, 
and taking the whole record, Philadelphia has had fewer strikes 
and lock-outs than almost any other city. 

Prof. Fawcett, indeed, has amused us by informing the English people 
that " the Manchester of America " has 119,000 paupers, or three times as 
many in proportion to her population as England has. The professor, 
unhappily for his country and his race, has lost his sight, and is therefore 
dependent upon those who read to him. By an inadvertence of some of 
these, the number of dollars expended in the relief of the poor of Phila- 
delphia was transmuted into the number of poor who receive relief. Even 



THE FARMER PROTECTED. 239 

that sum is deceptive; as good salaries are paid to officials and the pau- 
pers are kept in such style that gout is a common disease at the alms- 
house. Philadelphia has something over three thousand in-door and 
at out a thousand out-door paupers, nearly all unable to work. 

As to being " the Manchester of America," Philadelphia may accept 
the compliment with qualification. She ranks above Manchester and 
next to London as a manufacturing city. 

And these cities can claim no monopoly of prosperity. In 
Massachusetts, for instance, the number who receive relief from 
the state is reduced ten per cent, since 1855. Tlie Boston 
Traveller says : " Fifteen years ago a visit to those districts in 
any of the cities of the Commonwealth that are occupied as 
homes by the working classes, revealed poverty and want in 
marked contrast with their present position. Then, the child- 
ren, with bare feet and half covered with ragged garments, 
looked half-starved, as they really were. But to-day the visitor 
to the same district will find them comfortably clothed and shod, 
and having a cheerful look that gives the most unmistakable 
evidence that hunger is a stranger to them. The decrease in 
pauperism is therefore largely due to the better remuneration 
received by the working classes.'^ 

§ 228. Secondly, protection to industry is as much needed 
by the farmer as by the manufacturer. The farmer, and in 
general all the producers of the raw material of our industries 
and of food, need direct protection. The excessive grain- crop 
of the West, as we have seen, finds no outlet for more than a 
fraction of its amount in the European markets. What becomes 
of the bulk of it ? It is mostly consumed by the people of the 
Eastern States, which might, but do not, produce enough food 
to feed themselves. Perhaps a great multitude of Western 
farmers could have found better work on the unoccupied land in 
the East; but as things are, they are secured the Eastern market 
for Western products by direct protection. If we had free trade 
with Canada, the farmers of that region, who pay little for labor 
and little for government, would be glad to sell their produce to 
New York and New England at prices with which the West 
could hardly compete. But a tariff on farm produce shuts them 



240 ELEMENTS OF POLITICAL ECONOMY. 

out, or keeps up prices so far that the Western producer has a 
chance. 

So with other producers of raw materials. Our coal-mines 
have to compete along the seaboard with the mines of Nova 
Scotia ; our salt-makers with the Liverpool exporters ; our wool 
growers with those of Canada and Europe ; our cotton planters 
once sought protection against the West Indies and may yet seek 
it again against those of Hindoostan ', our sugar planters are and 
deserve to be protected. All these industries are carried on 
under a weight of national taxation that would make interna- 
tional free trade a bounty upon foreign importations. In every 
case the great body of protectionists and all their leading thinkers 
have urged generous consideration of the claims of this class of 
producers. 

A number of New England manufacturers have indeed taken another 
course. For the sake of getting the raw materials of their manufacture 
cheaply, they urge that we should admit free of duty whatever is " repro- 
ductively consumed," and impose duties on what is not. See A Manual 
of the Currency, by George A. Potter, New York, 1868. 

§ 229. The benefits extended by national legislation to agri- 
culture under the Nationalist policy does not stop at its pro- 
tection. It is heavily subsidized by the nation. The Pro- 
tectionists voted the Homestead Law, to enable the farmer to 
begin his occupation of new lands under the most favorable con- 
ditions. They also have always carried out the policy of subsidiz- 
ing new roads and railroads, so as to give the farmer free access to 
his market. " A tariff and internal improvements " have always 
gone together in our political war-cries. The agricultural de- 
partment of the government has been kept up for the benefit of 
the farmer, that a knowledge of the best methods of work might 
be disseminated, and new plants imported, acclimatized and 
scattered over the land. All these proceedings are capable of 
vindication only on the principle that it is wise and right for a 
nation to make sacrifices to promote industry; on free trade 
principles they are wrong. 

§ 230. Just as the laborer's prosperity is measured by the 
relation of his wages to current prices, and not by the latter 



THE farmer's market. 241 

alone, so the farmer's is measured by the relation of the prices 
of raw and of manufactured goods — including food under the 
former, — and not by the prices of either one. Wherever the 
manufacturer is found at work, the prices of the two converge ; 
wherever he is wanting, and the farmer stands alone, their prices 
diverge. On the Schuylkill, for instance, the price of a pound 
of rags and that of a pound of paper come very near to each 
other. Suppose there were no paper-mills elsewhere in the 
Union ; then as one went west the prices of the two would 
diverge with every mile. At the foot of the Rocky Mountains 
rags would be as good as worthless, while paper would bring a 
far higher price than in the east. Just such is the relation of 
the price of raw materials of all sorts as compared with the 
price of manufactured goods of all sorts. The points where the 
lines of price almost converge are those at which the one is 
transformed into the other by manufacture. Free trade would, 
not completely, but in great measure, transfer those points to 
the other side of the ocean. Would the producer of food and 
of raw materials be benefited by the transfer ? He would have 
to pay the heaviest tax upon industry, the cost of transportation 
in each direction. He would spend two bushels of corn in get- 
ting one to market, and then pay in equal measure for everything 
that he needed to bring back for his own use. 

§ 23L Protection to industry gives the farmer an abundant 
and steady market for his breadstuffs, and creates a market for 
crops more remunerative than grain. The European market for 
our wheat and corn is furnished by England, and is the most 
unsteady that can be thought of. The amount that is needed 
depends, first of all, upon the character of the English harvest, 
which commonly furnishes from two-thirds to three-fourths of 
what is needed. Then Mark Lane turns to the wheat crops of 
the Baltic and the Ukraine (and the corn crop of Turkey) to 
supply the deficiency, as the English consumer prefers their round 
hard grain to the American. If they cannot get enough there, 
they send orders to the United States. The farmer ordinarily 
runs the risk of a bad harvest; our farmers take the risk of 
16 



242 ELEMENTS OF POLITICAL ECONOMY. 

three. If two harvests abroad have been pretty bad, and that 
at home has been not too good, he will make money. Otherwise 
he may perhaps burn corn for fuel, as was frequently done in 
free trade times. One year England will purchase of us seven- 
twentieths of all the wheat that she needs ; the very next year 
(1865) only one-twentieth. Her demand of us fell in 1872 to 
8 J million bushels from 13^ millions in the previous year. The 
price varies, though not as much as the amount, and by no 
means depends upon the quantity taken, but upon how far that 
comes up to the supply. Thus in 1856 the quantity was nearly 
six times as great as in 1869, and the price was twice as high. 
Worse still, the price that England must pay for the petty 
quantity she takes, exercises a great influence upon that of the 
entire crop, destroying the stability of our home market. 

§ 232. The policy which increases the number of those who 

are not engaged in farming, but must live on its products and 

pay for them, is that which secures to the farmer the best and 

steadiest remuneration. The average consumption of wheat in 

America is more than five bushels per head ; on an average of 

years a native of the British islands consumes about a peck of 

wheat grown on our soil. It will, surely, be the wisest way to 

refuse to buy British goods, and thus draw her workmen across 

the ocean to manufacture the same articles here. It will pay 

better to feed them here than at home, and thus save the cost 

of transporting both their food and their manufactures, besides 

selling to each of them twenty times as much of the former. 

And besides, it will be wiser to attract a multitude of our 

own home population to manufactures, and thus create a steady 

home market for food. Free traders urge the farmer to secure 

the choice of two markets to make his purchases in, the home 

and the foreign. The American artisan has no such choice of 

two markets ; he must buy his food at home. Even if he lives 

along the Canadian border he finds himself shut out from that 

market by protective duties on American produce. 

§ 233. This fact, that the interest of the farmer and the 
manufacturer are identical, attracted the attention of Franklin. 



THE farmer's home MARKET. 243 

He wrote home from London in 1771: " Every manufacturer 
encouraged in a country makes part of a market for provisions 
within ourselves, and saves so much money to the country, as 
must otherwise be exported to pay for the manufactures he 
supplies. Here in England it is well known and understood 
that wherever a manufacture is established which employs a 
number of hands, it raises the value of land in the neio:hborin2 
country all arouod it. It seems, therefore, the interest of our 
farmers and owners of land to encourage our young manu- 
factures in preference to foreign ones." 

General Jackson, in a famous letter to Dr. Coleman, puts the 
case very forcibly : " The American farmer has neither a foreign 
nor a home market, except for cotton. Does not this clearly 
prove that there is too much labor employed in agriculture ? and 
that the channels of labor should be multiplied. Common sense 
points out at once the remedy. Draw from agriculture the 
superabundant labor, and employ it in mechanism and manu- 
factures, thereby creating a home market for your breadstuffs, 
and distributing labor to a most profitable account, and benefits 
to the country will result. Take from agriculture in the United 
States 600,000 men, women and children, and you at once give 
a home market for more breadstufis than all England now fur- 
nishes." 

§ 234. The creation of a varied industry enables the farmer 
to enrich himself without impoverishing the soil. It does so by 
bringing the farmer and the artisan into neighborhood, and giv- 
ing the former facilities for making returns to the soil that he 
would not otherwise possess. It does so by creating a demand 
for less exhaustive crops than the great staples that are needed 
in the foreign market. It does so by promoting the cattle- 
farming that has turned large areas of Belgian peat and sand 
into the richest farms in the world. It does so by making it 
worth while to farm more carefully, through the certainty of a 
permanent local market, rather than to get out of the soil as 
fast as possible all the easily accessible elements, and then move 
on westward to take up new land. What has been the history 



244 ELEMENTS OF POLITICAL ECONOMY. 

of American agriculture thus far? It has mostly been the rob- 
bing the soil of its most valuable qualities to export its wealth 
across the ocean. " In my opinion it would be improper to 
estimate the total annual waste of the country at less than equal 
to the mineral constituents of fifteen hundred million bushels of 
corn. To suppose this can continue is simply ridiculous. As 
yet we have much virgin soil, and it will be long ere we reap 
the full fruits of our improvidence ; but it is merely a question of 
time. With our earth-butchery and prodigality we are each year 
losing the intrinsic essence of our vitality" (Geo. E. Waring). In 
some parts of the country it is no longer a question of time. 
Districts like the region around Albany will now yield but a 
third the amount of wheat that the first settlers got from thern. 
The New Englanders have been the most wasteful of our farmers. 
W^herever they have settled, as in western New York, the soil 
has been blighted under their feet. On the other hand, the 
grain farmers of eastern Pennsylvania, by their steady care to 
keep up the fertility of the soil, have made their lands more 
valuable with every year. Not that their methods are first-rate; 
any one who has seen a European farm knows how much they 
have to learn, especially on the utilization of manures. But by 
sowing clover, a plant whose roots thrust themselves down to the 
subsoil and take mineral sustenance from that, and by ploughing 
down the clover with lime, the land has been kept up to a fair 
degree of fertility. The possession of a home market, however, 
and the command of the refuse of our towns and factories, and 
the opportunity to keep large numbers of cattle and to alternate 
other crops with grain, have been the chief cause of their pros- 
perity. The farmer who has his market at hand, unless he be 
unusually thriftless and wasteful, can go on year after year im- 
proving the instrument by which he makes his living ; he who 
depends on a distant market has no choice, as he must go on, 
year after year, destroying it. 

§ 235. Protection diminishes the risk of farming by giving 
variety to its products. The farmer who depends upon exporta- 
tion puts all his eggs into one basket. Excessive rains or ex- 



PROTECTION AND COMMERCE. 24£ 

cessive droughts, insects and blights, wage war upon the few 
staple articles that he can find a market for. If he had the 
consumers at hand, he could sell them a great variety of crops; 
if one failed, the others would ordinarily — not always — escape. 
Green crops flourish under the rainfall that ruins wheat ; the 
blight that spreads ruin among the grain is powerless over the 
bay. The soil that yields a poor and a risky return for one 
article is just the thing for another. 

§ 236. Thirdly, the people of a nation reap a benefit from 
the restrictive policy, in that it applies the law of parsimony to 
the number of the commercial class, and to their profits. 

A country is wealthy in proportion to the amount of its labor 
for which it can find productive employment, in directing either 
the organic or the formal changes of matter that fit it for man's 
use. But the trader and those whom he directly employs produce 
nothing; he only contributes to the productiveness of labor by 
saving the time that the producer might otherwise waste in 
seeking a purchaser. The more the service of the trader is 
needed, the less is the net benefit derived from him, because the 
greater in that case is the amount of the tax he imposes upon 
the article on its way from the producer to the consumer. This 
tax is ordinarily greatest when the distance between the pro- 
ducer and the consume is greatest, and, as we have seen, is in 
that case not limited to the cost of transportation and a fair 
profit for his services. By practices and methods, of which arti- 
ficial scarcities are but extreme instances, the price of the goods 
that he transmits is lowered or raised at pleasure, either to 
destroy competition in the market where he sells, or to reap the 
large profits that far more than repay him for that and other 
sacrifices. That these profits are ordinarily excessive in the 
absence of home competition is evident from the fact that he 
can aff"ord to pay a considerable share of the protective duties 
designed to create home competition. 

The restrictive policy brings the producer and the consumer 
into neighborhood, and thus diminishes their need of the trader, 
and weakens his power over them. The heavy tax of trans- 



246 ELEMENTS OF POLITICAL ECONOMY. 

portation is saved ; men are set free from that most laborious 
and unproductive of occupations to engage in otliers which are 
productive, and which this very policy has called into existence. 
The buyers of an article are no longer dependent upon the 
trader as to the price they will pay ; if it be exorbitant, they 
can go direct to the producer. The market can no longer be 
forestalled, because the great and necessary commodities are no 
longer concentrated in a few hands, but pass in much smaller 
parcels, and through much fewer hands, from those who produce 
them to those who need them. 

§ 237. Not that this policy destroys international commerce j 
it only transforms it and makes it more equitable. From an 
exchange of raw materials for manufactured goods, it raises it 
to an exchange of manufactured goods on each side. Even if 
the value of international exchanges is not reduced — and pro- 
tection oft'^en increases them — their bulk and the cost of their 
transportation are reduced, and that very decidedly. Men have, 
thereby, more power to command the use of ships, and less need 
to use them. It gives men at once more power over ships, and 
ships less power over men — which is the law of progress 
in regard to the instruments of wealth. It restores the equili- 
brium of foreign exchange, and puts an end to the export 
of specie from the poorer to the wealthier countries, retaining it 
where it is most needed by increasing its utility and purchasing 
power. 

A country that continually develops native wealth and in- 
dustry by a consistent Nationalist policy grows in power to pur- 
chase those articles that its own manufactures do not yet supply, 
or that can only be produced in another climate than its own. 
The country that has the most diversified industry is best able 
to patronize the finer industries of other countries. The servant 
girls of the Northern States before the war bought more English 
silks than did the slaveholding aristocracy of the South. Every 
country that carries on an unrestricted trade with another much 
richer than itself, purchases a less and less valuable class and 
amount of goods with every generation, till at last its demand 



COMPLAINTS OF THE TRADING CLASS. 247 

counts for nothing in the markets of the other. In so far as a 
richer country persuades the poorer ones to follow this policy, she 
herself becomes less of a workshop and more of a mart ; their 
raw products pass through her ports and factories with ever less 
of elaboration and an ever greater diminution in their amount. 
From carrying on commerce with the world she sinks to the 
position of a nation of shopkeepers and traders which carries on 
commerce for the world. 

The relations of Ireland, Portugal and Turkey to England illustrate 

what we mean. See next chapter. England's very best customers are 

the Protectionist nations. 

§ 238. The numbers and the prosperity of our own trading 
class that are engaged in foreign commerce show that the pro- 
tective policy has not extinguished that occupation. They show 
likewise that the profits of manufacture under protection are not 
so great as to cause an excessive diversion of capital in that 
direction. 

If we were to listen, indeed, to the complaints of some of this 
class, we should infer in them either a great want of common sense, 
or a sublime disregard of their own interests. They complain, 
without courting any comparison of their ledgers, that the 
profits of the manufacturing class are inordinately great, — that 
two or three hundred per cent, per annum are reached in this or 
that line of production. Then, why not leave importing and go 
to manuficturing ? Oh, they are too moral! "Those who 
believe that a legal monopoly is a system of robbery protest 
against it on principle, and do not want to share its ill-got gains " 
{Evening Post). Or if this be incredible there is another reason. 
*' The profits are so precarious that before the year is up we may 
lose everything by a reduction of the tariff" {Ibidem). There 
would be very little danger of a reduction were it not for the 
zealous warfare that these gentlemen wage upon the tariff. If 
our manufactures are an unsafe investment, it is they who make 
them so. In doing so they not only keep those profits up, if 
they are high, by checking the flow of capital in that direction, 
but make those (supposed) high profits right and reasonable, as 



248 ELEMENTS OF POLITICAL ECONOMY. 

covering not only a fair return for the invested capital but a fair 
insurance for the risk thus created. 

§ 239. Fourthly, and especially, the restrictive policy fosters 
and encourages the growth of manufactures, and is often the 
only way to create a varied industry in a new or a poor country 
that does not possess it. 

In imposing a protective duty upon the products of foreign 
manufacture, the aim is not dearness or scarcity, but the reverse. 
Prohibitory duties or the legal monopoly of a manufacture by a 
few persons might produce a scarcity; but protective duties 
operate in exactly the contrary direction. 

If dearness — and we measure that by the labor-cost always — 
were to be the result, and even the permanent result of such a 
policy, it might yet be vindicated as a wise measure, for all the 
reasons we have already specified, — reasons that relate to the 
economy of labor, of agriculture, and of commerce. 

But a rise in price can be but a temporary result of the pro- 
tective duty, while only prohibitory duties can create scarcity. 
And even if we leave out of view those compensatory advantages 
that accrue to the community from the first, the temporary sacri- 
fice involved in the temporary increase of price is a measure of 
wise policy quite in the line of the best statesmanship in other 
fields of national life. 

The establishment of a post office, which in a country like the 
United States will not pay for itself for centuries to come, is a 
measure whose wisdom none disputes. It binds the people in 
one, promotes intelligence, helps the popular education, renders 
services that far outweigh its cost. Yet a consistent free trader 
must oppose the measure, as taxing the mass of the people for 
the benefit of the classes who use the post office; if he defended 
it, it would be on grounds of indirect benefit that would justify 
a like sacrifice in the protection of home industry. 

Our public school and college system is another instance of 
this. Consistent free traders, like Herbert Spencer and Gerritt 
Smith, must oppose the measure. It is taxing all classes for the 
benefit of one class of "producers," the fathers and mothers; 



WISE NATIONAL SACRIFICES. 249 

it is the expenditure of public money for other ends than those 
of police at home and defence abroad. It can only be justified 
on the ground that it pays in the long run, and indirectly to all 
classes, as protection does. And protection itself, as Mr. Mill 
very forcibly puts it, is a method by which producers are " edu- 
cated up to the level of those with whom the processes have 
become habitual. '^ 

Not only the education, but the rearing of children, which 
the Christian state imposes upon the parents by its laws to give 
perpetuity to the relationship of marriage, and to punish in- 
fanticide, is a business involving large sacrifices for an ultimate 
benefit. Were not the natural afi'ections too strong for logic, we 
might have zealous advocates of free trade urging men to give 
up this wasteful business, and import full-grown men and 
women from Europe, where they are to be had so cheap. 

In short, wherever we turn we find the farsightedness that 
makes the sacrifice, and the nearsightedness that refuses to make 
it, set over against one another, and the one approved as wisdom 
by the consent of mankind, which rejects the other as folly. 

§ 240. Protection, adopted for these ends, has the sanction of 
nearly all the great free trade authorities. Adam Smith con- 
ceded that, " by means of such regulations, indeed, a manufacture 
may sometimes be acquired sooner than it could have been other- 
wise, and after a certain time may be made as cheap or cheaper 
than in the foreign country/' His chief French disciples are 
Say, Blanqui, Rossi, and Chevalier. Say taught that " pro- 
tection granted with a view to promote the profitable ap- 
plication of labor and capital might be productive of universal 
benefit. New modes of employment, though destined to result 
in great advantage when the workmen have been trained and 
the preliminary obstacles surmounted, were liable, without the 
aid of government, to cause heavy loss to the undertaker — a 
result carefully to be avoided. '' Blanqui writes that " experience 
has already taught us that a people ought never to deliver over 
to the chances of foreign trade the fate of its manufactures." 
Rossi declared that " in the conduct of a nation/' as in that of 




250 ELEMENTS OF POLITICAL ECONOMY. 

a family, sacrifices needed to be made in the hope of thereby 
opening " new roads to affluence." Chevalier declares that 
^' every nation owes to itself to seek the establishment of diversi- 
fication in the pursuits of its people, as Germany and England 
have already done in regard to cottons and woollens, and as 
France herself has done in reference to so many and so widely 
different departments of industry ;" that this " is not an abuse 
of power on the part of the government; on the contrary, it is 
the accomplishment of a positive duty which required it so to 
act at each epoch in the progress of a nation as to favor the 
taking possession of all the branches of industry whose acquisi- 
tion is authorized by the nature of things. Governments are, 
in effect, the personification of nations, and it is required that 
they should exercise their influence in the direction indicated by 
the general interest, properly studied and fully appreciated/' 
And in his opinion, " combination of varied effort is not only 
promotive of general prosperity, but is the one and only condi- 
tion of national progress." 

All these gentlemen belong to the free trade school, especially 
Chevalier. So does John Stuart Mill, who is of the opinion 
that " the superiority of one country over another in a branch 
of industry often arises only from it having begun it sooner. A 
country which has this skill and experience to acquire may in 
other respects be better adapted to the production than those 
earlier in the field; and, besides, it is a just remark that no- 
thing has a greater tendency to produce improvement in any 
branch of production tnan its trial under a new set of conditions. 
But it cannot be expected that individuals should at their own 
risk, or rather to their certain loss, introduce a new manufacture 
and bear the burthen of carrying it on until the producers have 
been educated up to the level of those with whom the processes 
have become traditional. A protecting duty continued for a 
reasonable time will sometimes be the least inconvenient mode 
in which a country can tax itself for the support of such an 
experiment." 

Mr. Geo. W. Smalley (of The N. Y. Tribune) asked Mr. Mill during 
his later years, " whether he still adhered to this statement ?" " Ce.r- 



MR. J. S. MILL ON PROTECTION.- 251 

tainly," was his answer j "I have never affirmed anything to the con- 
trary. I do not presume to say that the United States may not find 
protection expedient in their present state of development. I do not 
even say that if I were an American I should not be a protectionist." 

If there be any doubt as to the practical bearing of these 
concessions, especially the last, it is dispelled by Prof. Thorold 
Rogers : " Few statements made by any writer have, I am per- 
suaded, been more extensively, though unintentionally, mis- 
chievous than this admission of Mr. Mill. The passage has 
been quoted over and over again in the United States, and in 
the British colonies, as a justification of the financial system 
which these communities have adopted. The circumstances in 
which they are situated exactly square with the hypothesis of 
Mr. Mill. The countries are young and rising, — industries, as 
yet nascent, are thoroughly suited to the natural capacity of the 
region and of the people ; the latter being of the same stock 
with the mother country whose manufactures they prohibit and 
discourage. There is no reason, apparently, except that of 
priority in the market, why the industry of the old country 
should not be transplanted to the new. Hence, I repeat, Mr. 
Mill's concession is perpetually quoted, and is perpetually mis- 
chievous." Protectionists may now cease quoting Mr. Mill, and 
begin to quote Prof. Thorold Rogers. 

§ 24L The object and the effect of protective duties, then, is 
to enable the home producer to furnish the manufactured goods 
more plentifully and cheaper than before the duty was imposed. 
*' Though it were true," says Alexander Hamilton, " that the 
immediate and certain effect of regulations controlling the com- 
petition of foreign with domestic fabrics was an increase of 
price, it is universally true that the contrary is the ultimate 
effect of every successful manufacture. When a domestic manu- 
facture has attained to perfection, and has engaged in the prose- 
cution of it a competent number of persons, it invariably 
becomes cheaper. Being free from the heavy charges which 
attend the importation of foreign commodities, it can be afforded 
cheaper, and accordingly seldom or never fails to be afforded 
cheaper in process of time than was the foreign article for which 



252 ELEMENTS OF POLITICAL ECONOMY. 

it is the substitute. The internal competition which takes place 
Boon does away everything like monopoly, and by degrees re- 
duces the price of the article to the minimum of a reasonable 
profit on the capital employed." 

So well ascertained and so necessary is this result as regards 
the profits of manufacture that Prof. Thorold Rogers alleges it 
as a reason against protection : " Unless the state were to go so 
far as to grant a monopoly of production to one or a few indi- 
viduals whom it protects, it could not prevent the operation of 
that economic law which reduces profits, other things being 
equal, to an equality. Manufacturers crowd into the protected 
occupation, and the benefit intended to be secured by the policy 
of the government is distributed and annihilated by competi- 
tion.'' Mr. Rogers does not seem to be aware that this is the 
very " benefit intended to be secured." But we have his word 
as to how that policy does and must work, — above all that it 
involves no monopoly. 

" Competition being always free," says McCulloch, " among 
home producers, the exclusion of any particular species of foreign 
manufactured goods cannot elevate the profits of those who pro- 
duce similar articles at home above the common level, and 
merely attracts as much additional capital to that particular 
business as may be required to furnish an adequate supply of 
goods." 

Neither of these two authors, it will be perceived, concedes that prices 
are brought down by protection to the foreign rate ; but they both show 
that the foolish clamor as to the excessive profits of the protected manu- 
facturer has nothing to go upon. Mr. D. A. Wells flatly contradicts his 
English teachers when he says : " It not unfrequently happens that the 
imposition of a tax in the form of a tariff on an imported article is made 
the occasion for very greatly and unnecessarily advancing the price of a 
corresponding domestic product." 

§ 242. What are the reasons for this final reduction in price ? 
It is because the obstacles to cheap production have been over- 
come, and the home producers are competing for the home 
market. These obstacles are manifold. (1) The lack of se- 
curity deters the manufacturer from putting his capital into a 
large undertaking. He has to make great outlays, great sacri- 



England's industrial warfare. 253 

fices even, but he has no security that he will ever reap the 
fruits, unless the home market is secured to him. He fears the 
foreign competition more than that of his competitors at home, 
because the latter stand on an equality of power and capacity 
with him, while the former are able and ready to make large 
sacrifices simply to drive him out of the market and secure it to 
themselves. It is not a matter as to which we are left in any 
doubt that artificial fluctuations are produced for this purpose. 
"It has already been shown," says Coleridge in 1834, "in evi- 
dence which is before all the world, that some of our manu- 
facturers have acted upon the accursed principle of deliberately 
injuring foreign manufacturers, if they can." " Experience,'* 
says Blanqui, one of the free trade economists of France, " has 
already taught us that a people ought never to deliver over to 
the chances of foreign trade the fate of its manufactures." 

A report presented to the British Parliament in 1864: by a commission 
appointed to investigate the state of industry in the mining districts 
says : — 

*' The laboring classes generally in the manufacturing districts of this 
country, and especially in the iron and coal districts, are very little aware 
of the extent to which they are often indebted for being employed at all 
to the immense losses which their employers voluntarily incur in bad 
times in order to destroy foreign competition, and to gain and keep 
possession of foreign markets. Authentic instances are well known of 
employers having, in such times, carried on their works at a loss amount- 
ing in the aggregate to £300,000 or £400,000 in the course of three or 
four years. 

" If the efforts of those who encourage the combinations to restrict the 
amount of labor and to produce strikes were to be successful for any 
length of time, the great accumulations of capital could no longer be 
Oiade which enable a few of the most wealthy capitalists to overwhelm 
all foreign competition in times of great depression, and thus to clear the 
way for the whole trade to step in when prices revive, and to carry on a 
great business before foreign capital can again accumulate to such an ex- 
tent as to be able to establish a competition in prices with any chance of 
success. 

" The great capitals of this country are the great instruments of war- 
fare against the competing capital of foreign countries, and are the most 
essential instruments now remaining by which our manufacturing su- 
premacy can be maintained ; the other elements — cheap labor, abundance 
of raw materials, means of communication, and skilled labor — being 
rapidly in process of being equalized." 



254 ELEMENTS OF POLITICAL ECONOMY. 

So much for Tennyson's 

"... fair, whito-winged peace-maker." 
A greater poet had some excuse for making his Eaust say :— 

'^ Krieg, Handel und Piraterie 
Dreieinig sind aie, nicht zu trennen." 

§ 243. (2) The inexperience of the laboring class is not to be 
overcome in a day. Their lack of skill involves diflBculties and 
losses ; their industrial education, like all education, is an invest- 
ment that pays only in the long run. The unprotected manu- 
facturer is a captain of industry who must drill his men under 
fire, must expect to fight with them from the first day that he 
enlisted them. Foreign operatives, indeed, can be secured in 
some branches and for positions that require special skill. The 
non-commissioned officers of the industrial army may therefore 
be men of some experience, but the rank and file employed in a 
new industry are raw recruits. But when once the army has 
learnt its drill, work becomes as effective as anywhere else, and 
the labor-cost, and with it the labor-price of production, is as 
low as elsewhere, and lower at home, as the cost of transportation 
and the profits of a long string of middlemen are no longer 
added to the price while the article is on its way from the pro- 
ducer to the consumer. 

And the captains of industry themselves need drill and ex- 
perience as well as their workmen. The processes of a great 
manufacture are not to be learnt in a day, even if no changes in 
method are contemplated. But among the great advantages 
gained in the acclimatization of new industries, not the least is 
the gain in improved methods when an old industry is tried 
under a new set of conditions. Many of the most notable labor- 
saving inventions, beginning with Whitney's cotton-gin, owe 
their existence to the efi"orts of those who were engajjed in 
prosecuting new and protected industries. Such has been the 
history of the sugar manufacture in Europe, which now actually 
pays duties that discriminate in favor of cane sugar from the 
West Indies, and yet partly supplies even the English demand 
The great advances made in the application of chemistry to 



PROTECTION CHEAPENS. 255 

manufactures, date from the efforts of Napoleon to make the Con- 
tinent independent of England. Thirty yeara ago Dr. Wayland 
entered his protest against the duties that discriminated in favor 
of home-made cutlery, since " not a thousandth part of the 
cutlery used is made here." Since then, by the invention of 
new machines, England is actually surpassed in the production 
of all but the finest varieties. 

The Spectator (London) declares that the new manufactures 
in Bengal will in a few years be strong enough to hold their own 
against English competition, but that at present, or so long as 
" coal is dear, and the hahit of manufacture upon the large scale 
not yet formed,'^ the removal of high duties would cause them 
first to languish and then to die out, as the native manufactures 
of India did half a century ago. 

An English Trade Circular of 1871 says: "Every Canadian season 
affords unmistakable evidence that some additional article in English 
hardware is being supplanted by the produce of the Northern States, and 
it is notorious how largely American wares are rivalling those of the 
mother country in other of our colonial possessions, as well as upon the 
Continent. The ascendancy of the Protectionist party in the States con- 
tinues to operate most favorably for the manufacturing interest there, and 
it is no wonder that, under such benignant auspices, the enterprise in 
this direction is swelling to colossal proportions." 

§ 244. (3) The' complete organization of industry, and the 
accumulation of the capital that make it possible, are not effected 
in a day. It is a commonplace of the economists that the pro- 
ducts of industry are cheapened by extending the scale of pro- 
duction. Very often a manufacture already existing in the face 
of unrestricted foreign competition is carried on in a small, 
feeble and costly way for lack of assurance as to a large demand 
for it. But as soon as protection gives it that assurance the 
production is doubled, trebled, quadrupled, — and the price is 
pulled down to less than the previous selling rates instead of 
increasing by the amount of the duty imposed. Thus the selling 
price of American cottons fell after the tariff of 1842 imposed a 
heavy duty on English cottons, instead of rising. Something 
of the same sort in the hardware trade was evidenced by an 



256 ELEMENTS OF POLITICAL ECONOMY. 

English circular of that year offering hardware at rates that 
after paying the new duties would still be a little lower than 
they had been before. The same was the case with the price of 
starch, and doubtless with many other articles, which at once 
began to be made in large quantities instead of small. Mr. 
Greeley illustrates this by the case of a newspaper ; double its 
circulation, and the publisher can afford a better paper at a less 
price. 

§ 245. Much is often made by the opponents of protection of 
a case in which the adjustment of duties is exceedingly difficult. 
It may be desirable to protect both the production of the raw 
material and of the finished product of an industry. This occurs 
more frequently elsewhere than in our own country, but the case 
of the woollen and iron industries brings this within the number 
of our tariff problems. Our present tariff on wools and woollens 
was adjusted on a basis agreed to by a joint convention of wool- 
growers and wool-manufacturers, but it is complained, by a small 
minority of the latter, that it forces them to pay an exorbitant 
price for certain grades of foreign wool which they must have 
to mix with native wool for the production of some classes of 
goods ; and that the protection accorded them by duties on the 
goods is nullified by the duties on wool. The same complaint is 
made by some manufacturers who need a large supply of steel and 
iron, and who say that the steel that they can buy in the Ameri- 
can market is inferior, or the iron too dear. These complaints 
may or may not have foundation in fact, but the true remedy 
seems to be the higher protection of the manufactured goods, 
rather than the proposed " removal of duties from articles re- 
productively consumed." The difficulty will disappear as the 
production of these raw materials of the manufacture is brought 
nearer perfection ; and no one that believes in protection could 
consistently seek its solution in the removal of duties. 

In conclusion^ a formfial answer to a few of the more common 
ohjections may not he out of place. 

I 246. (1) " Protection discriminates against the consumer, 
in favor of the producer." Who this consumer is, that is neither 



WHAT IS HIS INTEREST? 257 

a producer as well, nor directly dependent upon the prosperity of 
other people who are producers, is hard to say. His name and 
the mysteriousness of his character would seera to indicate that 
he is the Devil. But most likely he is an innocent ens lo^iciim, 
manufactured by the same process of abstraction by which the 
economists devised their economical man — " a covetous machine, 
inspired to action only by avarice and the desire of pro- 
gress." That is, they cut away or stole away (abstracted) the 
better half of the real being, and persisted in treating the 
remaining human fragment (if we can call it human) as a living 
reality. "The consumer" always buys and never sells — has no 
soul and no patriotism — has no interest but the cheapness of 
commodities — belongs to none of the classes that make up the 
industrial state. His sole function in life is to devour the result 
of other men's labors, but he adds nothing himself to the sum 
of the utilities that make wealth. There may be a few excep- 
tional persons in the nation that deserve to be called mere con- 
sumers — /ruffes consumere nati — but that the national policy is to 
be for ever directed in accordance with the interests of an insig- 
nificant and useless class, is a large assumption. And that their 
interest lies in the direction of dependence upon the farther 
producer, instead of the nearer, we have seen reason enough 
to doubt. " The consumer " must be as short-sighted as he is 
hard to find, if he thinks it does. 

It is said that " the interest of the consumer is the interest of 
society, while that of the producer is the interest of a class." The 
interest of the mere consumer is in mere cheapness. His interest 
must be best secured in a condition of business and industry in 
which prices are the lowest and the producers are underbidding 
each other for customers. But that condition is found in what 
are called hard times. Either such times are a golden age, for 
whose coming we should pray, or the interest of the mere " con- 
sumer " and that of society are nut identical. 

§ 247. (2) " But it is every one's interest — his money inte- 
rest, at least — to buy in the cheapest market, and sell in the 
dearest he has access to." Suppose that his buying in the 
17 



258 ELEMENTS OF POLITICAL ECONOMY. 

cheapest market makes the difference of his having no dearest 
market to sell in, but only a cheapest market for that purpose also. 
Then manifestly his interest is found, if he have anything to 
sell, be it sweat of brow or of brain, be it wares or provisions, 
in the comparative rates of the two markets. Free trade simply 
forces him — forces all the producers in the country — to buy in 
the markets that now exist, be they good or bad, without giving 
them either right or power to create a new and a better market 
than any that exists. 

The sole interest of a man is not in the spending the money 
he has now in his pocket, be it great or small. A larger interest 
for him is the getting more to replace it. And then the interest 
of those who have empty pockets, of the unemployed laborers 
of a country, runs still more strongly in the same direction. 
Terence could buy " as much for a shilling in Ireland as he can 
here for a dollar." Why then didn't he stay there ? Because 
he " couldn't get the shilling," and he can compass the dollar. 

It is not, then, anybody's interest to buy in the cheapest and 
sell in the dearest of existing markets, if by that operation he 
leaves hirqself, in the long run, without much or anything to 
buy with. Least of all is it the interest of a nation, which has 
the power to create for itself markets in which the relative 
cheapness and dearness is really in favor of all classes qf buyers 
and sellers. 

§ 248. (3) " Every country has its own natural advantages, 
from which Providence meant the rest to derive benefit. 
Each country should do the things that are easiest. Free trade 
proposes that they shall do so — Protection that they shall not. 
It is, therefore, a setting aside the course of nature; it is intro-^ 
ducing an unnatural system of exclusion." 

Every country has its own natural advantages, from which 
Providence evidently meant its own people to derive benefit. 
To that end Providence itself gives a certain measure of natu- 
ral protection in the cost of transportation, &c. Were all the 
international relations of thfe people in a natural state, that natu- 
ral protection would possibly be quite sufficient. But the purely 



NATURAL ADV;\NTAGES. 259 

artificial status of those relations, produced by an unnatural 
national economy of some of them, deprives others, the newer 
and weaker countries, of the opportunities of natural growth 
and development. It is the aim of protection merely to remove 
the obstacles to natural growth. 

This natural growth is achieved in the equilibrium of the 
industries. If one wealthy nation has destroyed that at home, 
has impoverished her agriculture by driving out of that channel 
the mass of the population, and is thereby forced to find work 
for them in manufacturing goods for foreign countries, and food 
for them in the unequal exchange of those goods for wheat and 
corn, all her financial power is at once exerted in the direction 
of destroying or hindering the growth of the equilibrium of the 
industries elsewhere. That she may manufacture for the rest 
of the world, the rest of the world must confine itself to raising 
food and raw materials for her. 

Is it " natural " that any nation should keep its farms on one 
continent and its workshops on another? Is it ''natural" that 
cotton, on its way from the grower to the wearer, should go 
half-way round the globe and back again? Is it "natural" 
that a large part of the race should be employed in carrying 
bulky articles — raw materials and coarse goods — from some 
countries to others in the same climate and of the same 
general capacity? Is it "natural" that a country with 
millions of tons of iron on the surface of her soil, and 
square miles of good coal not far below it, and most of her labor 
running to waste for lack of employment, should send for rail- 
road iron thousands upon thousands of miles ? (See § 282.) Is 
it not a most unnatural and artificial system ? Or is there no 
test of what is " natural " in this connection, except present 
cheapness in money price? 

Protection is natural resistance to an unnatural state of 
things. If to the superficial eye it wear the appearance of 
artificiality, it shares in the reproach of many a just war, which, 
although defensive in reality, wore the appearance of being 
offensive. 



260 ELEMENTS OF POLITICAL ECONOMY. 

§ 249. (4) " Protection can change the direction of capital, 
but does not add to its amount or efficiency. It can only divert 
it from more to less remunerative channels, without in the least 
adding to its power to employ and fertilize labor, or increase 
the national wealth/' 

This argument has been partly refuted in the exhibition of 
the effects of a varied industry upon labor. Its chief author, 
Adam Smith, gives us its refutation in another direction, when 
he calls attention to the greater rapidity of movement of a capi- 
tal employed in a home manufacture than a foreign trade, a con- 
sideration that has great weight when a country of limited capi- 
tal is under discussion. We have also seen that the capital that 
is wastefully and feebly employed in a native manufacture under 
free trade, becomes far more efficient when a protective duty 
gives it a larger market. Far less than double capital will do 
quadruple the work, when the demand is quadrupled. 

But the chief answer is that capital grows steadily under a 
nationalist policy, and declines as steadily in its absence. For 
capital grows as the power of association is increased, and the 
social circulation is accelerated; declines with the decline of 
either. Men can save only when they have plenty of work, and 
that work is remunerative. A nation that leaves its labor largely 
unemployed is unable to make those accumulations of the results 
of past labor that we call capital. A nation that secures its peo- 
ple as much and as varied industry of a productive and re- 
munerative kind as the case permits, is on the road to wealth. 
In the latter case the results of labor are more evenly distributed 
than in the former; they are represented by the houses owned 
by well-paid workmen ; the accounts kept at the saving's 
banks; the possession of better furniture; the better education 
of the children. In the former the gains effected gather into 
the possession of a few men of great fortune; they make a 
greater display, but the mass of the population are in penury. 

Even if this objection were true in the sense in which it is 
meant, the advantage of protection would be great. To direct 
a part of the capital out of the channels in which alone it would 



"protection does not protect." 261 

earn a return under free trade, — the channels of money-lend- 
ing, land speculation, transportation and agriculture — would 
prove a great gain to all classes, by increasing the rapidity of 
commerce at home, by diversifying industry, and adding to the 
mutual helpfulness and interdependence of the people. For a 
new country, in the present state of the world's industry, the 
question is not between this raanufticture and that; not between 
" manufactures suited to the character of the country, and there- 
fore remunerative," and others that " must be carried on at a 
loss." It is substantially between agriculture associated only 
with a few of the rudest industries that supply its direct wants, 
and the equilibrium of the industries, in which manufactures 
hold their due place. Under all these smooth sayings lies this 
harsh alternative, which is carefully hid away from the popular 
sight by round words. 

§ 250. (5) " Protection does not protect." This paradox 
bears two senses : 1. " Production does not increase prices, and, 
therefore, does not stimulate home production. Look," we 
are told, " at its effect on copper. A heavy duty was imposed, 
and the effect was that the article reached figures so low that 
several mi^s had to stop, and its price at home is more governed 
by the prices that it brings in the foreign market than ever 
before." This is quite true, and yet the aim of the protective 
duty was accomplished. The American producer was secured 
control of the home market; if he went into over-production he 
made a mistake from which no national policy or legislation could 
save him. That he began to export pig copper, and thus to 
make himself dependent upon the foreign market, is not the 
fault of the tariff. He merely repeated what has been pointed 
out as the great mistake made by the farming interest. Mean- 
time, what becomes of the theory that protective duties add 
just their amount to the price at home ? 

2. It is also said to mean : " Protection makes production so 
expensive that the home manufacturer is shut out from com- 
peting in the foreign market. The amount of our exports 
declines, and the national wealth is diminished.'' 



262 ELEMENTS OF POLITICAL ECONOMY. 

In 1860 the value of our export of manufactures was 
$42,100,000. In 1881 it was $77,300,000, or including all 
manufactured foods, $165,874,000. But even if it were much 
less than this proportion, we should have every reason to be 
satisfied. The chief problem for the country is to secure such 
an equilibrium of our industries as shall employ as many of 
our people as possible in serving each other, and thus dimin- 
ish our dependence upon foreign products. The growth of 
domestic commerce under the protective policy far more than 
compensates for any loss it might have inflicted as regards 
commerce with foreign countries. And a manufacturing sys- 
tem which has the patronage of fifty millions of people can 
afibrd to dispense with a good deal of foreign custom. 

It is quite true that America will obtain a very large share of 
the world's commerce in the not distant future. Her share in it 
now would have been much greater than it is if she had adopted 
the policy of subsidizing steamship lines, by which the English 
producer has been brought near to every foreign market, and has 
been enabled to send his goods abroad at less than the real cost 
of transportation. The quality of our exports of manufactures 
is what has made for them the foreign demand whicl;^does exist. 
We make more honest cottons, more ingenious and serviceable 
tools, and better adjusted machinery than our rivals. Had we 
followed the free-trade principle, which exalts mere cheapness 
above everything else, we should not have efi'ected these gains. 

But it must be borne in mind that the amount of its exports 
is no safe criterion of the general prosperity of a country. That 
notion originated in countries that have made themselves de- 
pendent upon the vicissitudes of foreign trade. If we export 
less because we have the power to consume more at home so 
much the better. This must certainly be true of the United 
States under the present tariff. The manufactures of the 
country have vastly increased, and if we send less of their pro- 
ducts abroad, it must be because we have grown wealthier as a 
nation and individually — able to command the use of more 
commodities. 



THE POWER OF IMAGINATION. 263 

§ 251. (6) " Protection discriminates against the poorer and 
more thinly settled districts of the nation in favor of the older 
and the richer states." We have partly answered this in show- 
ing that it did not discriminate against the farmer. 

The tariflf is no more designed for the East than for the West 
Even if it had only the eflfect of bringing the Western farmer's 
market to buy and sell from across the Atlantic to our own sea- 
board, the West would have saved that much — the tax of trans- 
portation across the sea, the uncertainty of foreign demand, &c. 
The only industry that the West could cultivate without the 
tariff is the raising large quantities of wheat, to be sold in Lon- 
don or Liverpool at $1.40 per bushel put down, after paying 
railroads, grain-dealers, shipowners, and the like. 

But the official figures show that the West is benefiting by the 
tariff even more than the East. While the increase in the entire 
value of our manufactures between 1860 and 1870 was 128 per 
cent., in the seven principal Western States it was over 400 per 
cent., and the increase in all the Southern States also outran the 
national average, in spite of the vast destruction of property and 
the prolonged suspension of industry there during the war. 

These facts are sufficient for our purpose here, but to the ad- 
vocates of the Nationalist policy they are not satisfactory. The 
South and West might have done far better than this; would 
have done so were it not for the wide dissemination of the notion 
that the tariff is a law for the benefit of Eastern and Northern 
manufacturers. Even in regard to material interests imagina- 
tion governs men greatly. The West and South are both awaken- 
ing to this fact. Georgia is ambitious of becoming the centre 
of the cotton manufacture, and Chicago and Minneapolis are 
destined to become two of the greatest manufacturing centres 
of the world. 

My old classmate, the postmaster of Charlotte, N. C, tells me that he 
found the people of his neighborhood so completely possessed with this 
prejudice, that he could hardly induce them to begin manufacturing their 
own cotton instead of exporting it. By taking advantage of every occa- 
sion, public or private, he at last persuaded them to organize companies 



264 ELEMENTS OF POLITICAL ECONOMY. 

to start spinning-mills and weaving-factories, so as to find a local invest- 
ment for their little savings. The result has been that employment has 
been found for large numbers who would otherwise have remained idle ; 
the water-power that was running to waste has been utilized ; profits 
larger than those of the Northern manufacturer have been realized; the 
price of cottons in the neighborhood has been reduced, and the general 
well-being of society generally promoted. 

§ 252. (7) " The doctrine of protection leads on logically to 
the platform of the Communists. It teaches the people that it 
is the business of the state to provide for the prosperity and em- 
ployment of the people. The next step is to assert that the 
people have a right to employment, and that if the competition 
of individual capitalists fail to furnish them with that, the state 
must step in to establish national workshops for the benefit of 
those who are out of work. From this, to the monopoly of all 
industry, and consequently of all property by the state, is an 
easy descent." 

The Nation (April 9th, 1874) speaks of "European socialism, the seeds 
of which were naturally found in Continental centralization, and were 
brought to this country in the protective system." 

Protection cordially accepts the existing order of society, the 
present distribution of wealth and the lawful freedom of indi- 
vidual action, as right and proper. Its chief advocates (Thiers, 
&c.) have been zealous opponents of Communistic socialism, and 
the ablest defenders of the rights of property. While it asserts 
that the industrial growth and welfare of the people must be 
among the first cares of the statesman, it does not teach — what 
all experience refutes, that this can be attained through the 
direct action of the state as the employer and organizer of labor 
in general, while it with consistency accords the state a monopoly 
of a few departments, such as the post-oflBce. 

That the protectionist principle bears some resemblance to the 
false positions of the Communists, or can be made to do so in 
clever but hostile statements, we do not care to deny. It con- 
tains the truth of which communism is the counterfeit false- 
hood, — the truth that it is the duty of the state to " promote 
the general welfare. '* It thus furnishes the best refutation of 



PKOTECTION AND COMMUNISM. 265 

communism, for error is never defeated and put to rest by bare con- 
tradictions, but by the statement of the truth that lies nearest to 
them, or even involved in them, and that gives them what vitality 
they have. If the assertion of that duty leads on to com- 
munism there is unhappily no escape for the American nation ; 
the country stands already committed to it by the preamble to 
the United States Constitution. That that preamble pointed to 
a protectionist policy is clear from the expressions of popular 
feeling while the Constitution was under discussion, and from 
the legislation adopted by the first Congress under the new 
government. 

Throughout the earlier chapters we have seen two great con- 
trasted theories of the nature and efi'ects of social progress under 
the existing constitution of society. The one declares that the 
world under the freedom of individual action is drifting steadily 
toward distress and misery ; that whatever progress is achieved 
enures only to the benefit of the few, and rather detracts from 
than adds to the well-being of the many; that it is in the 
interests of the rich to keep the wages of the poor as low as pos- 
sible so long as free competition is the law and rule of industry. 
"Whoever holds with this teaching must vibrate between 
the theory of state passivity or free trade, and that of the reno- 
vation of society by the destruction of the existing rights of 
property and methods of distribution. He will incline to the 
former whenever he is least hopeful of the future of society, or 
least alive to its miseries. He will favor the other whenever he 
is awake to those miseries, but confident that they are not the 
necessary lot of mankind. 

The other' body of teaching declares that power and freedom 
go hand in hand in the world's progress ; that except by arti- 
ficial interference every gain for man in power over nature is a 
gain for all ; that wealth naturally tends to an equable distribu- 
tion among all classes ; that the interest of the capitalist is to 
pay well those whom he employs so as to develop their power to 
the uttermost ; that labor continually and naturally grows in 
power over all the accumulations of past labor that we call 



266 ELEMENTS OF POLITICAL ECONOMY. 

capital. If the latter teaching be likely to lead some of the 
thoughtless into communism or socialism, is it not far more likely 
that the former will lead thither those of the thoughtful who are 
not able to think their way out of these doctrines ? 

And we are not left to conjecture here. Mr. Mill is certainly, 
after Adam Smith, the most distinguished writer of the Free 
Trade School ; in his Autohiography he discloses the fact that 
his hearty acceptance of the doctrines of Malthus, Ricardo and 
his own father, had led him to such gloomy conclusions as to the 
results of the existing organization of society and its distribution 
of property, that he had come to the conclusion that it would 
be a change for the better were some modification of socialism 
to be substituted so as to put a limit to the great and growing 
inequality of wealth and extension of poverty that he saw around 
him. He also tells us, what is the fact, that Bastiat adopted in 
part the views of the Nationalist school in order the better to 
fight the Communists who attack landed property. What 
Schultze-Delitzsch and his Opponent Lassalle have to say on 
this question has already been told (§ 114). 



CHAPTER TWELFTH. 

The Science and Economy of Manufactures. — The 

Practice. 

§ 253. The theory and the practice of national economy, as 
already remarked, (§ 6), do not always go hand in hand. The 
theory in some cases is much better than the practice ; men see 
and approve the better course and follow the worse. In other 
cases it is worse than the practice, or lags behind it. In all the 
more necessary and practical affairs of life, men are not left de- 
pendent upon the possession of correct theories. They do in- 
stinctively the right thing, having no conscious reason, or only 
a bad one; and after their practice has been repeatedly sub- 
jected to the censures or the mockery of shallow theorists, it is 
at last vindicated by the riper judgment and clearer insight of 
wiser men. 

It is, therefore, a mistake to suppose that the practice of na- 
tional economy at a time when correct or current theories of the 
subject had not yet begun to be formed, is unworthy of our study. 
Men " builded wiser than they knew" in many things; the great 
and wholesome instincts that grew out of the national life into 
which they were born, and from which their own life derived 
half its value, led them aright where they had no theory; and 
only shallow doctrinaires would depreciate the results as having 
no right to exist, because not attained logically. 

§ 254. The ancient writers on political philosophy confined 
their attention chiefly to the jural state. But the actual rulers 
had a clear notion of economic policy. Boeckh has shown (as 
against Heeren) that Athens took measures to protect home in- 
dustry, to develop its various forms, and to make the state inde- 
pendent of its rivals for the necessaries of life. The low concep- 
tions of political morality that prevailed, allowed of the use of 
means to this end which are not capable of vindication. If an ally 
of Athens had corn to sell, it must be brought to the port of 

267 



268 ELEMENTS OF POLITICAL ECONOMY. 

Athens (the Pirgeos), and a certain proportion must be sold for 
use in the citj itself^ and at a fixed price, before any could be 
disposed of at competition prices to the merchants of other 
cities. The effect of these measures was limited by the nature 
of the political constitution of Greece. In this as in other mat- 
ters every city legislated for itself; nothing was done to benefit 
Grreece as a whole, and to bring her different divisions into the 
close and friendly relations of mutual helpfulness. Even the 
structure of the country forbade this; it was easier and cheaper 
to feed Athens with corn from the Chersonesus than to carry 
food over the mountain passes from Boeotia. That the country 
never became an industrial whole, is connected with the fact that 
it was never a political unit. It fell into subjection through the 
weakness of its social constitution. 

Rome also adopted a Protectionist or Nationalist policy in 
earlier times, when she was still a people among the peoples. 
Already she was a great industrial city, competing with Carthage 
for the commercial preeminence of the Mediterranean. When 
she became an empire, the enemy and the destroyer of nationali- 
ties, she of course abandoned that policy. 

§ 255. In the middle ages industry was in the hands of 
chartered guilds, and was a matter of privilege and prescrip- 
tion. The states that awoke to the importance of the industrial 
life of the community all took measures to protect and cherish 
local industries. In Italy the great prosperity of Venice was 
largely owing to the care with which she protected all the inte- 
rests of her merchant princes, and the rival cities of the main- 
land followed hard in her footsteps. 

Charles V., of Spain and Germany, studied the maxims and 
methods of Venetian policy, and adopted them in Spain. But 
when the industries of his kingdom sprang into life, he loaded 
them down with oppressive and vexatious burdens, in order to 
raise money for his wars. The alcavala imposed a tax upon 
every transaction, the intercourse between the provinces was 
put under a heavy tariff of duties, and the right to collect these 
was farmed to individuals who were often foreigners. Every 



HENRY IV. AND COLBERT. 269 

wise maxim was set at nought, and the country languished in 
ever-deepening poverty. 

§ 256. In France, the leading statesmen had learnt the 
same lesson from the Italian cities, but to better purpose. Sully, 
indeed (anticipating the Economistes of the last century), wished to 
promote agriculture alone, and regarded manufactures as promo- 
ting luxury and waste. But France owes to the care and 
patronage of his wiser master, Henry IV., the transfer of the 
growth and manufacture of silk from Italy to her own soil. 

Colbert, the greatest statesman of the reign of Louis XIV., 
was recommended to the confidence of that monarch by the 
Cardinal Mazarin as his last act. The King " might with truth 
and justice say that, in giving him Colbert, Grod had done much 
for the prosperity and glory of his reign. France might add 
that she owes to his wise counsels the wonderful develop- 
ment of her industry" (Thierry), His "spirit has appa- 
rently never ceased to influence the councils of his country'* 
(Dr Travers Twiss, in 1847). He found the finances in a ruin- 
ous state, and that the industrial interests of the country had 
been sadly neglected during the period of confusion that had 
elapsed since the death of Henry IV. As Adam Smith says, 
he combined great integrity and great clearness of intellect, 
with the habits of a laborious man of business. His weakness 
was undoubtedly his too great faith in the virtues of legislative 
interference. He did not know when to stop. He found the 
frontiers of the provinces lined with custom-houses for the col- 
lection of unnatural duties upon domestic commerce, and these he 
wisely transferred to the frontiers of the nation. He developed 
the French marine by a system of bounties. He removed 
excessive burdens from the shoulders of the agricultural class, 
and then did them more than equal harm by prohibiting the 
export of wheat. In 1661: he had enacted his great tariff" law, 
by which duties were taken off" exports, and imposed upon man 
ufactured goods imported from other countries. That the effect 
was " the prodigious development of France under the encour- 
agement which it aff"orded them" (Blanqui) is admitted even by 



270 ELEMENTS OF POLITICAL ECONOMY. 

the Free Traders, who deplore the means he adopted. Those 
light and graceful fabrics, in whose production the skill and 
nice taste of this Celtic people find exercise, were naturalized in 
France by Colbert ; without him, as Irish history shows, these 
national gifts might have lain idle. " France," says J. B. Say, 
" at present contains the most beautiful manufactures of silk 
and wool in the world, and is probably indebted for them to the 
wise encouragement of Colbert's administration." Some En- 
glish writers urge, indeed, "that France showed signs of 
revived prosperity and augmented wealth under the administra- 
tion of Colbert, was to be attributed to the re-establishment of 
order in the finances of the country, and the removal of various 
obstacles which impeded the operation of certain branches of 
industry" (Twiss). It is certain that France was a richer 
and more prosperous country than at any previous period, 
partly in spite of the meddlesome trifling of the regulations 
which Colbert imposed upon the industries he had called 
into existence. The man could put no restraint upon his won- 
derful gift for arranging details ; he irritated the French mer- 
chants till they told him that what they chiefly asked of him 
was to "let them alone" (^Laissez faire) ; and one of them de- 
clared that Colbert, after getting the coach out of the slough on 
one side, had tumbled it back again on the other. 

France did not "long reap the benefits that Colbert's system 
conferred. Louis XIV. had no sense of the importance of in- 
dustry. He wrote to Charles II.': "If the English are satisfied 
to be the merchants of the world, and leave me to conquer it, 
the matter can easily be arranged. Of the commerce of the 
globe, three parts to England and one part to France." He. 
therefore, wasted the national wealth in unsuccessful wars, and 
generally bought peace by granting treaties which pledged 
him to remove duties from foreign manufactures. That of 
Nimeguen. in 1713, completed the work of destroying the pro- 
tective system. Colbert died of a broken heart in 1683, amidst 
general distress ; two years later a still more deadly blow was 
struck at French industry at home ; the edict of Nantes (1598), 



THE EXPULSION OF THE HUGUENOTS. 271 

by which the Huguenots received full toleration, was revoked 
(1685), and half a million of the most industrious and intelli- 
gent class of French manufacturers and tradesmen were driven 
into England, Holland and Germany. "They carried with them 
the skill and intelligence, and the secrets of trade that made 
France great, and many of the most important industries of 
England, especially, are traced back to those expatriated 
Frenchmen." " They are at this time improving the manufac- 
tures of your majesty's enemies," pleaded Colbert against the 
measures of intolerance undertaken even during his lifetime; 
he himself afforded them all the protection in his power. No 
greater service could be rendered to the Protestant cause outside 
France than was rendered by the intolerance of Louis XIV. ; 
it laid the foundation of the industrial, and, consequently, of 
the political predominance of the Reformed nations, by supply- 
ing just the element that their manufacturing methods most 
lacked. The reign that opened with such bright promise iu 
1661, closes in 1715 with a universal depression of every matC' 
rial interest of France. 

The history of the financial policy of France between this 
period and the accession of Turgot, in 1783, is a story of make^ 
shift and extravagance, in which the Law episode is merely 
the most fantastic passage. Turgot was theoretically a free 
trader of the school of, the Economistes ) but he seems to 
have shrunk instinctively from any steps to realize these views, 
while he took the boldest measures to destroy monopolies and to 
release labor from traditional shackles of all sorts. His success- 
ors in 1786 negotiated a treaty with England, by which France 
was flooded with English goods, and in two years the manu- 
facturing industries of France were almost annihilated. Distress 
became so universal that the government was forced to call the 
States-General, and the Revolution — whose first and loudest cry 
was " Give us bread !" — began. 

§ 257. Napoleon restored the policy of Colbert. He united 
all Central Europe into one vast empire, with perfect freedom 
of trade between all its divisions, and in so far allowed the devel- 



272 ELEMENTS OF POLITICAL ECONOMY. 

oped industry of one part to cramp the development of that of an- 
other, knowing that France chiefly profited by this. But he 
shut out from the Continent the manufactures of the power that 
had long kept all the rest in industrial subordination, and every- 
w4iere throughout Europe manufactures began to spring up 
again. He had as little liking for English doctrines as for Eng- 
lish goods. In 1803 he forbade J. B. Say to publish in France 
the work in which he had systematized the views and theories of 
Adam Smith. He said : " If an empire were made of adamant, 
political economy would grind it to powder." But he had 
thoughts of his own on the subject. " Formerly there was only 
one kind of property, land ; another has now arisen, industry." 
He would defend the one as well as the other from invasion by 
" the nation of shopkeepers." 

England had control of the seas, and Europe drew her supply 
of sugar mainly from the British colonies. Prussian chemists 
had been making experiments on the extraction of sugar from 
the beet, under the patronage of Frederick the Great, who was 
like Napoleon a very decided protectionist. At the Prussian 
king's death, the experiments ceased for lack of means to carry 
them on. They were again resumed under Napoleon, and the 
French Institute appointed a commission to look into the matter. 
The first attempts were failures, and France went on for years 
paying fifty cents a pound for foreign sugar. In 1810, the 
matter was taken up again under imperial patronage ; special 
schools of chemistry were founded, and a large area of land was 
devoted to the culture, and in 1812 nearly 5,000,000 pounds of 
beet sugar was in the market. The industry survived the 
Restoration, for the Bourbons did not bring back permanent 
free trade. " For thirty years nearly every law passed on custom- 
house matters has been intended either to establish or to con- 
solidate the system of protection and prohibition" (J. B. Say, 
1826). Beet sugar now holds its own against the foreign com- 
petitor, and pays a tax to the government. It occupies an ever- 
increasing area of Flemish, German, Swedish, Polish, Russian 
and French soil, — millions of acres of the last. Its production 



FRENCH PERSISTENCY IN PROTECTION. 273 

has invigorated other industries, especially agriculture ; the refuse 
pulp furnishes an excellent food for vast numbers of cattle, and 
their manure, with the other refuse of the factories, has added 
greatly to the fertility of the soil. No district produces less 
wheat, for having begun beet culture; generally more. It fur- 
nishes winter work, and work for women and children, eivinc' 
employment to a great number of persons, who would else be 
idle. The Journal des Fahricants de Sucre for January 4th 1866, 
says : " One of the most remarkable and interesting facts of the 
past year is the export of considerable quantities of sugar from 
France to England, a country that, not many years ago, tried to 
stifle the beet sugar industry in its cradle." 

§ 258. Under all changes of government, France clung to 
the commercial policy of Colbert and Napoleon, down to our own 
times. That she advanced most rapidly in the development of 
every material interest, is as clearly proved by the official returns 
to the government as anything well can be. Between 1820 and 
1857 the growth of wheat rose from 5.4 to 6-.8 bushels per head 
of the people, so that she feeds all her people, and has food to 
spare, though her population is nearly three times as dense as 
that of Pennsylvania. Between 1836 and 1856 the value of her 
exports increased 131 per cent., though the population had not 
increased five per cent. The increase in the value of British 
exports for the same period was 120 per cent.; and the amount 
of these that were paid for in imports was fully one-half, while 
that of France was not more than a fifth. 

In 1860 the superior person who had made himself Emperor 
of the French, and afterwards unmade himself, set aside all 
the traditions of French finance and negotiated a commercial 
treaty with England, providing for a reduction of import duties 
on both sides. The English free traders, Cobden, Gladstone, . 
&c., who were engaged in the negotiation, set at nought the tra- 
ditional maxims of the school. " We want trade," said Mr. 
Kicardo, "not treaties of commerce; for they are opposed to 
our principles." The great body of the French people, espe- 
cially the opponents of Napoleonic personal government, opposed 
18 



274 ELEMENTS OF POLITICAL ECONOMY. 

the treaty and its principles most strenuously; but English 
liberals elaborated it in secret conferences with the agents of 
the French empire, and rejoiced when the imperial will forced 
it upon " the most Protectionist of European lands," as one of 
Cobden's eulogists says. On the one hand England removed all 
duties on French manufactures and lowered the excise duties 
upon French wines and spirits; on the other hand French du- 
ties on English manufactures, if more than thirty per cent, ad 
valorem, were to be reduced to that amount at October 1st, 1861, 
and to twenty-five per cent, three years later. The effect was 
no doubt to increase very greatly the trade between the two 
countries ; they bought of each other many things that they 
had been accustomed to make at home, and employed a larger 
number of people in carrying these articles back and forward, 
instead of setting them at productive work. Some industries in 
each country gained at the expense of corresponding interests 
in the other ; they had been doing well, and they did better. 
Other industries in each were very greatly injured by the change, 
and numbers of people thrown out of employment. This gain 
was thought a sufiicient off-set among the friends of the treaty. 
France employed a far larger number of her people in serving 
foreigners, and made them dependent upon the vicissitudes of 
the foreign market. Hitherto she had suffered little or nothing 
from commercial revulsions and panics ; from this time they be- 
gan to affect her money-market and her industries. She lost in 
the stability of employments, wages and profits. But she lost 
much less than if she had made the experiment thirty or fifty 
years earlier; the gains of her long era of consistent and per- 
sistent Protection, made her able to sustain the hazard of the 
new era. She had become a rich country, with abundance of 
cheap capital, industrial skill, popular intelligence and enter- 
prise. She could afford some competition, and even the imperial 
charlatan did not design to try unrestricted competition. The 
duties preserved, — if we consider the stage of skill, industry and 
capital that France had reached — were really as fully protective 
as many that have been enacted in our own country with a view 



England's industrial beginnings. 275 

to protection. One of the emperor's organs, the Journal des 
Debats, boasted that he had outwitted the English statesmen, 
and that the thirty per cent, duties would be really protective. 

Our staunch friend, Count Agenor de Gasparin, in his Un Grand Petiple 
qui se Eeleve, asserts that the French Treaty is actually more prohibitory 
than the Morrill Tariff of 1S61. Yet French manufacturers complained 
of its terms. Although the duty on iron was $12 a ton, it was said that 
the production of iron in France was impossible. In 1868 the Chamber 
of Arts of Roubaix, the leading centre of the wool-combing industry, and 
the neighboring city of Tourcoing, protested against the renewal of the 
treaty, and the workingmen petitioned to the same effect. The manu- 
facturers of Lille and Amiens united in the protest, and the Moniteur In- 
dustriel complained that the treaty "has carried 20,000,000,000 francs to 
the debtor side of our national credit sheet." 

Since the French people obtained the control of their own af- 
fairs by the overthrow of the Second Empire, they have revised 
their general tariflf in a protectionist sense. For the treaty of 
commerce of 1860 they have refused, after negotiations prolonged 
over years, to substitute any other, unless it were one much less 
favorable to free intercourse with England. The duties on cot>- 
tons and woolens were the matters of most difficulty. 

§ 259. England owes her industrial greatness to the persist- 
ency with which she adhered to the Nationalist policy. Five 
centuries ago she was little more than an agricultural country. 
She produced an abundance of excellent wool, but her workshops 
were on the Continent, among the Flemings, whither English 
wool was carried to be converted into cloth. " The ribs of all 
people throughout the world are kept warm by the fleeces of 
English wool," (Matthew Paris). " Most articles of clothing, 
excepting such as were produced by ordinary domestic industry, 
were imported from Flanders, France and Germany. The names 
of the articles to this day indicate the places where they were 
manufactured. Thus there was the mechlin lace of Mechlin, 
the duffle of Duffel, the diaper of Ypres (d'Ypre), the cambric 
of Cambrai, the arras of Arras, the tulle of Tulle, the damask 
of Damascus, and the dimity of Damietta. Besides these we 
imported delf ware from Delph, Venetian glass from Venice, cord- 
ovan leather from Cordova, and millinery from Milan " (Smiles). 



276 ELEMENTS OF POLITICAL ECONOMY. 

The last term formerly included all sorts of fancy and ladies* 
wares. Edward III., " the greatest of the Plantageuets,'' a sov- 
ereign of the same class with Frederick and Napoleon, took the 
first step to bring the nation out of this industrial dependence. 
Some Flemish workmen had fled into England, and this seems 
to have suggested to him the idea of importing Flemish skill 
lather than its products, of bringing the farmer and artisan into 
neighborhood. An act of Parliament was passed in 1337, for- 
bidding under heavy penalties the exportation of wool and the 
importation of woollen goods. This heroic remedy probably 
caused some embarrassment, for the English did not possess 
the skill to produce the equal of Flemish fabrics; but the Flemings 
were in worse straits. " Then might have been seen throughout 
Flanders weavers, fullers, and others living by the woollen manu- 
facture, either begging or under stress of debt tilling the soil.'' 
A large number listened to the invitation held out by the 
English government, and finding themselves cut off from the 
English market so long as they remained at home, came over 
into England and brought their trade with them. Old manorial 
rolls and charters from this time on, contain great numbers of 
unmistakably Flemish names, especially those that relate to the 
Eastern shires. As to the exportation of wool, that became a 
monopoly of the king's exchequer, and added much to the rev- 
enue at a time when the kings were much in need of such sup- 
plies. England then declined to compete with and began to 
emulate Flanders ; artisan and farmer were brought into prox- 
imity, and the price of manufactured goods approximated to that 
of the raw materials. 

The penalty for a first violation of this law was a finej for a second, 
maiming; for a third, imprisonment; for a fourth, death. In 1746 the 
last was changed to seven years* transportation. In 1334 all were 
abolished. 

From this time woollens were the great English staple. Other 
branches lay under comparative neglect. Even iron was im- 
ported from the Continent for the use of English blacksmiths, 
and its cost was an important item in the expense of a farm 



CONTINENTAL REFUGEES IN ENGLAND. 277 

r§ 77). The coming in of Protestant refugees from the Low 
Countries and France,»which began about 1550, was so extensive 
that an investigation showed the presence of 40,000 that year 
in London alone. Queen Elizabeth planted a great number at 
the then decayed town of Sandwich, describing them as " men 
of knowledge in sundry handicrafts," such as " the making of 
says, baize and other cloth, which hath not been used to be made 
in this our realme of England.'' Both Norwich and Sandwich 
were recovered to prosperity by these foreigners. They intro- 
duced, besides the spinning and weaving of new fabrics, the art 
of dyeing, of which the Flemings had preserved the monopoly. 
" The native population gradually learned to practise the same 
branches of manufacture; new sources of employment were 
opened up to them ; and in the- course of a few years Eng- 
land, instead of depending upon foreigners for its supply of cloth, 
was not only able to produce suflScientfor its own use, but to ex- 
port the article in considerable quantities abroad '' (Smiles). 
They brought over the manufacture of lace and cutlery. They 
also put an end to the importation of cabbages, onions, and 
other vegetables from Holland, by establishing kitchen gardens, 
first at Sandwich and then at London. In 1621 the 10,000 
strangers in London were plying 121 dififerent trades. The un- 
wise intolerance of Continental governments led to these trans- 
fers of skill and experience, and pointed out the wisdom of the 
policy that brings the workshops of a nation home to its own soil, 
to the neighborhood of its farms. The industrial life of the Eng- 
lish people took a great advance; from the uniformity of a single 
occupation, they rose to that varied industry, which is the mark 
of a civilized people. 

§ 260. Under the Protectorate of Cromwell the foundation of 
England's merchant marine was laid by the Navigation Acts. 
The Dutch possessed a monopoly of the carrying trade, which 
was open to all. Even the produce of the British colonies was 
brought to England in Dutch bottoms. The new acts prohibited 
the importation of any but European goods in any but English 
ships, manned three-fourths by Englishmen. Upon European 



278 ELEMENTS OF POLITICAL ECONOMY. 

goods imported in foreign ships, they imposed discriminating du- 
ties. A cry went up at once that England was ruined; the goods 
that must be had from abroad were far more in amount than could 
be brought by the existing merchant marine, or any that could be 
procured for years to come. But Cromwell persisted, and by the 
end of his reign the Navigation Acts were so popular, that the 
first Parliament that met after the Restoration reenacted them in 
full at the very opening of its session. They took care, how- 
ever, to exclude Scotland, which Cromwell had treated as part of 
England, from their scope. England was a self-sufficient and 
independent country, more necessary to other countries than other 
countries were to her. At the date of their repeal she had given 
up that position ; it had become necessary almost to her existence 
that she should have free access to the markets of the world. 
The Dutch sought to maintain their supremacy on the seas by 
force, but the victories of Blake confirmed the legislation of 
Cromwell. 

§ 261. Under the later Stuarts the policy of naturalizing 
every species of industry was carried out with more or less 
energy. In 1677 appeared " England^ s Improvement hy Sea and 
Land. To Outdo the Dutch without Fighting. To Pay Debts 
without Moneys. To set at Worh all the Poor of England with 
the Growth of our own Land. . . By Andrew Yarranton, 
Gent.'' The author had taken pains to see how foreign trades- 
men turned out the goods that were in such demand ; he would 
have his countrymen come up to them in all things. Let them 
import the skill of the Grerman and the Dutchman, set up the 
linen trade and the iron manufacture at home, and improve their 
woollen staples by getting foreign machines and workmen. 
From this time the statute book abounds in acts to accomplish 
these ends, and unforeseen occurrences cooperated with them. 
The last great persecution of the French Protestants began, and 
the best skilled laborers of France were flying across her border 
to find a home among strangers. England, the old refuge of 
the persecuted, got her full share of them, at least 100,000 
skilled artisans. The wares made in England were only plain 
articles for common use. " The chief manufactures amons us 



THE HUGUENOTS IN ENGLAND. 279 

at this day are only woollen cloths, woollen stuffs of various 
sorts, stockings, ribandings, and perhaps some few silk stuffs, 
and some other small things scarce worth the naming ; and 
those already mentioned are so decayed and adulterated that they 
are almost out of esteem both at home and abroad " (Fortrey, 
1693), *' France had long been the leader of fashion, and all 
tlie world bought dress and articles of vertu at Paris. Colbert 
was accustomed to say that the fashions were worth more to 
France than the mines of Peru were to Spain, Only articles 
of French manufacture, with a French name, could find pur- 
chasers amongst people of fashion in London. . . So soon as the 
French artisans settled in London they proceeded to establish 
and carry on the manufactures which they had practised abroad ', 
and a large portion of the stream of gold which before had 
flowed into France now flowed into England. They introduced 
all the manufactures connected with the fashions " (Smiles). 
The hat trade especially was transferred from France to England, 
so that the French nobility and even the Roman cardinals had 
their hats made by the Huguenots at Wandsworth. Every 
species of woollens, linens, and fine hardware, glass and paper, 
known to trade was produced on English soil ; the silk manu- 
facture, which previous attempts had failed to transfer to Eng- 
land, now took root, and England soon exported large quantities 
of silk fabrics. To cherish the industry, the duties on imported 
silks were trebled, and then their importation prohibited. 
Strange to say, all classes of Englishmen still seem to think there 
was some gain to the nation in this importation of French skill, 
and in buying goods at home rather than in sending over the 
seas for them. The historians of English industry point to this 
era as one of the turning-points in the development of England's 
industrial greatness, and justly pride themselves on the fact that 
it was the readiness with which the nation opened an asylum to 
the persecuted of all nations that led to the building up her 
manufactures and the improvement of their processes. On 
their own principles they should see no difference between 
making these things at home and buying them in France. 



280 ELEMENTS OF POLITICAL ECONOMY. 

§ 262. In 1771 the iron trade was taken under the protection 
of the nation, heavy duties on its importation being imposed. 
About 1787 very great iraproveTiieDts in the method of its manu- 
facture were ^effected, and from this time English iron was 
increasingly protected by successive tariffs, till in 1819 the duty 
was £G 10s. a ton, although for years previous to this Ejjglish 
makers had undersold all others in every European market. Ifl 
1834 it was reduced to £1 a ton. 

But woollens were still the great staple of English manufacture 
in the 17th and 18th centuries, and every care was taken to 
protect their makers from foreign competition. In 1678 Indian 
cotton goods were denounced in petitions to Parliament, as 
threatening the ruin of the woollen trade. Between 1700 and 
1736 their importation and me were prohibited ; then the law 
was relaxed to allow the manufacture of mixed woollen and cot- 
ton goods ; in 1774 the manufacture of cottt)n goods was legal- 
ized, as a thing which '' ought to be allowed under proper regu- 
lations," among which were provisions to make sure that all that 
was worn was of British manufacture. When England beo-an 
this manufacture, India could supply her with cottons at a third 
the cost of home manufacture, and indeed their import was a 
chief business of the East India Company. But by strenuous 
protective measures, she developed the skill of her people, secured 
the invention of better machinery, made great accumulations of 
capital. The tariff of 1819 still prohibited the importation of 
cotton goods made east of the Cape of Good Hope, and imposed 
50 to 67 per cent, ad valorem duties on those that were made in 
Europe. She can now carry the cotton of Hindostan and 
Georgia over land and sea, spin and weave it into stuffs, and then 
carry it back to undersell the American and the Indian manu- 
facturer, who sees the staple growing under the windows of his 
factory. Having reached this point she throws off all protective 
duties and invites the world to imitate her magnanimity. 

The manufacture of cottons (coatings), seems to have begun at Man- 
Chester about 3640, the material being imported from the Levant. The 
name occurs much earlier, but really designates woollen fabrics. 



England's long persistence. 281 

One measure of protection to English goods was the prohibition upon 
the export of machinery for spinning, weaving or printing any sort of 
fabric ; persons who " enticed any artificer to go to foreign parts in order 
to practise or teach his trade " were liable to severe punishment. As 
late as 1842, the export of flax machinery was still forbidden. 

§ 263. Since the time when the chief American colonies de- 
clared and secured their independence, that is within the space 
of a century, great changes in the industry of the world have 
taken place. It has been, in another sense than the old phrase 
meant, " a century of inventions.'^ James Watt devised the 
condensing steam-engine; Hargreaves the spinning-jenny; Ark- 
wright the spinning-frame and the factory system ; Crompton 
the mule-jenny ; Cartwright the power-loom ; Whitney the 
cotton-gin ; Fitch the steamship ; Oliver Evans the high-press- 
ure engine; Stephenson the locomotive; Morse the telegraph ; 
Howe the sewing-machine. All these and a thousand less-noted 
inventions have added new arms and legs to capital and endowed 
the rich with the power to add to their wealth, to make steam 
and iron do the work of a vast multitude of human hands. No 
country has profited so vastly by these inventions as England ; 
none has guarded with such jealousy the material interests upon 
which she now bases her claims to greatness among the nations. 
On her small area she has gathered machines that do the work 
of four hundred and fifty million people. Improved means of 
communication have put her at the door of every other people 
under heaven. Vast accumulations of capital and the command 
of money at a low rate of interest, have enabled her to watch the 
shifts and changes of the market, to destroy hostile competition 
by temporary sacrifices, and to undersell every foreign manu- 
facturer at will. Yet not until almost our own days has she ever 
pretended to open her own markets to the competition of other 
nations, and in very great measure this pretence is only a pretence, 

§ 264. We have seen that Napoleon closed the market of 
Europe against her wares, and shut her out from all parts of the 
Continent, Even Russia, by the Peace of Tilsit (1807) joined 
the Continental system. The declaration of war in 1803 by 
England, when the ink on the peace of Amiens (1802) was 



282 ELEMENTS OF POLITICAL ECONOMY. 

" hardly dry" (Talleyrand), was largely due to the commercial 
jealousy of Eogland. " The emperor/' Talleyrand wrote to 
Fox in 1806, " does not think that this or that article of the 
Treaty of Amiens has been the cause of the war ; he is con- 
vinced that the true cause has been the refusal to make a treaty 
of commerce against the industrial and manufacturing interests 
of his subjects." But the overthrow of Napoleon, and the re- 
lease, of European nationalities from the imperial yoke, did not 
bring to England the permanent open market that she expected. 
France did not for an instant relax her protective system; the 
Bourbons watered what the Corsican had planted. Germany 
suffered for a time the misery of a sudden paralysis of her new- 
born industries, but the rise of the Zollverein put an end to 
this. Russia and the United States, after a period of Free Trade 
and industrial depression, both went back to Protection in 1824. 
Much the same was the course of events all over Europe. 

The revolt of the Spanish- American colonies in 1810, and the 
consequent destruction of the Spanish monopoly of their trade, 
gave an opening for the export of large quantities of English 
goods, which was eagerly embraced. The thoughtfulness engen- 
dered by free competition was finely illustrated ; cities received 
consignments of Epsom salts sufl&cient to physic every inhabitant 
once a day for two or three generations to come; to others, in 
which ice and snow had never been seen, whole cargoes of skates 
and pattens were sent. This reckless trading to the supposed 
Eldorados of the West, had its necessary results in a violent 
commercial panic. 

§ 265. Up to 1832 England was governed by the upper 
classes, " the landed interest," who had influence enough to re- 
turn the majority of her House of Commons. By the Reform 
Bill of that year, such a redistribution of seats was effected, as 
transferred the power to the middle classes, who were chiefly 
interested in manufactures. "Since 1832 we have had a sys- 
tematic course of legislation, in which the wants and the wishes 
of the middle classes have been carefully attended to, and their 
interests habitually consulted. But we have seen no signs of 



THE I-NDUSTRIAL REVOLUTION. 283 

the same solicitude with respect to the necessities and interests^ 
certainly not less pressing nor less important — of the working 
classes." — (^London 31orning Post). This gradually gave a new 
direction to the industrial policy of the country, and led to 
changes in the legislation. The old restrictive duties upon for- 
eign manufactures were removed or greatly reduced, in the hope 
that the example would have the effect of leading other peoples 
to throw open their markets to British goods. The protection 
given to British agriculture hy the Corn Laws, was removed, 
in order to secure cheaper food for the English laborer, and keep 
*' the natural and necessary rate of wages " at the lowest point, 
so that the loom-lords might be able to sustain competition in 
the price of their fabrics. From this era England has steadily 
and unceasingly preached the beauties and benefits of unre- 
stricted trade, and professed her repentance for the worse than 
blunders of her former method, declaring that her own " experi- 
ence has fully proved the injurious effect of the protective sys- 
tem and the advantage of low duties upon manufactures." 
(^Government Minute, 1859). Homines facile credunt id quod 
volunt (Caesar). 

" Mr. Pitt in 1787 found our customs-law a mass of intricacy and con- 
fusion. ' The mode in which he proposed to remedy this great abuse was 
by abolishing all the duties which now subsisted in this confused and 
complex manner, and to substitute in their stead one single duty on each 
article, amounting, as nearly as possible, to the aggregate of all the vari- 
ous subsidies already paid.' Also, ' in some few articles,' for example 
timber, he meant to introduce ' regulations of greater extent,* but such 
was the general scope of his arrangement. During the war and during 
the first years of peace, many augmentations of duty took place, some 
for purposes of revenue, but with the effect of enhancing the stringency 
of protection ; some for protective purposes alone. The tariff underwent 
a general revision in 1819, . . . and again under the government of Lord 
Grey, a large number of minor duties were reduced in 1832 and 1833, but 
it was in the interval between these two periods that the most important 
relaxations of the prohibitory and protective system were introduced into 
the law, first by Mr, Wallace [1823], and afterwards and principally by 
Mr. Huskisson [1823-27]. Still it continued to contain some prohibitions 
and a very great number of prohibitory rates of duty ; and no approxi- 
mation to unity of principle was discernible in its structure as a whole. 
In 1842 it was attempted to make an approach to the following rules: 



284 ELEMENTS OF POLITICAL ECONOMY. 

(1). The removal of prohibitions. (2). The reduction of duties on mana« 
factured articles, and of protective duties generally, to an average of 20 
per cent, ad valorem. (3). On partially manufactured articles to rates 
not exceeding 10 per cent. (4). On raw materials to rates not exceeding 
5 per cent. The duties were then reduced on about 660 articles." 
(Gladstone.) 

The tariffs of 1845-6 still further reduced duties, leaving those on silk 
N at 15 per cent.; on made-up fabrics of other material, 10 per cent.; not 
made-up, free. The corn laws were finally repealed in 1849, and the dis- 
Qrimination in favor of colonial sugar abolished in 1851. The tariff of 
1853 fixed 10 per cent, as the maximum on all manufactures except silk, 
and abolished various unproductive duties. It substituted specific for 
ad valorem rates. The French Treaty of 1860 abolished the duties on 
French manufactures. The chief changes since 185.H have been the re- 
moval or reduction of revenue duties on articles in general use, — tea, 
, sugar, and the like. All these tariffs admit the principle of discrimina- 
tion in favor of home industry. 

§ 266. With the very partial exception of France (§ 258), 
no continental people has followed English example. " There 
is no doubt/^ says The (London) Economist, '' that Free Trade 
is one of the most unpopular things in practice in the world." 
It has not enabled England to hold the position of industrial 
superiority that she once did. " We have now/' says a Free 
Trade authority, *' many rivals, where thirty or forty years ago 
we had none ; we formerly supplied nations, which now partially 
or entirely manufacture for themselves ; we formerly had the 
monopoly of many markets, where we are now met and under- 
sold by young competitors. To several quarters we now send 
only that portion of their whole demand, which our rivals are 
at present unable to supply. A far larger proportion of our 
production now than formerly is exported to distant and unpro- 
ducing countries, ... to our own colonies and our remote pos- 
sessions. More, relatively, is sent to Africa and America, and 
less to Europe. Countries which we formerly supplied with the 
finished article, now take from us only the half-finished article 
or the raw material. Austria meets us in Italy; Switzerland 
and Germany meet us in America ; the United States meet us 
in Brazil and China. We formerly sent yarn to Russia ; we now 
send cotton-wool; we sent plain and printed calicos to Germany, 



CONTINENTAL WARES IN ENGLAND. 285 

we now send mainly the yarn for making them. All these 
countries produce more cheaply than we do, — but as yet they 
are not producing enough ; we therefore supplement them . . . 
Henceforth otir manufacturing industry can increase only, not 
by underselling or successfully competing with our rivals, but by 
the demand of the world increasing faster than our rivals can 
supply. This is . . . preeminently the case with our chief 
manufacture, the cotton." (^The North British Review^ 1852.) 
Be it noted that these rivals who now compete on equal terms 
with England in the markets foreign to both, are nations who 
first refused to compete with her in their own home markets. 
They developed under the shelter of protective tariffs the skill 
and the capital, which have enabled them to emulate her as a 
producing and an exporting nation. 

§ 267. Even in the English home market the competition of 
foreign manufacturers has been keen and effectiv.e. Many minor 
branches of trade, which cannot secure a voice in Parliament 
and some sort of indirect protection, have been nearly ruined. 
For instance, the cheap labor of Norway and Belgium and the 
access to abundance of timber, have enabled those countries to 
export doors and window-frames at prices with which English 
house-carpenters cannot compete, and great numbers of them 
have been obliged to emigrate. The larger industries have not 
escaped. The abolition of duties on French manufactures in 
1860 simply destroyed the extensive manufactures of silk in 
Coventry and Macclesfield, and sent hosts of their workmen to 
the poor-house. The importation of French silks was quadrupled. 
English statesmen looked on, suppressing all national instincts 
for the sake of a theory, and exhorted the silk-weavers to im- 
prove their machines and processes, or else take to something 
else. Formerly Coventry and Macclesfield competed with Lyons 
for the American market. Now the competition is only between 
the French and the American silks. So in less degree of the 
iron trade, the paper trade, and even the cotton trade. Thirty 
Prussian locomotives are running on one English railway, and the 
massive girders of the new St. Thomas's Hospital, under the very 



286 ELEMENTS OF POLITICAL ECONOMY. 

windows of the Houses of Parliament, were forged, framed and 
fitted in Belgium, after a free and open competition in which a 
dozen English manufacturers joined. Englishmen ask why is this, 
and find the answer : The foreign workman outdoes the English 
in effectiveness, because he is better trained and educated, and the 
natural organization of labor has been carried almost to perfection. 
The Continental states do not leave everything to the scramble of 
free competition ; they have no faith in the Laissez /aire maxim. 
They make temporary sacrifices, such as the outlay on popular 
education, both directly to schools and teachers, and indirectly 
by protective tariffs, and reap benefits manifold. 

See an article on " Continental Iron Works Supplying English Mar- 
kets/' copied into Littell's Living Age for May 23d, 1868, from The London 
Revieto. The writer tells this story : 

"An English manufacturer met a friend the other day in London. 
*What are you doing here?' he said. The other told him in confidence 
that he was waiting to know the result of a competition for a large 
quantity of work. ' I fully expect the order/ he said, * for I have tendered 
at a price by which we shall lose, merely to keep the works open.' The 
other asked if he had any objection to exchange figures with him, as all 
the tenders were in, and he had himself tendered for a Belgian firm. The 
Eaglishman named his price. 'You may go home then !' said the other. 
* I am fifteen shillings a ton below you, and it will pay our firm very well 
at that price.' " 

In 1874, when the iron trade at home was especially depressed by the 
sudden cessation of the demand in many parts of the world, following 
the panic of 1873, the English government sent out a commission to 
inquire upon what terms and of what quality Belgian iron, especially 
ship-plates, and bars and sheets used in ship-building, oould be imported 
for the Admiralty. They did so because they found that Belgian iron in 
general could be had at 10«. to 20s. a ton cheaper in London than Eng- 
lish could ; and because this particular class of iron was monopolized by 
a few firms, and cost £10 a ton more than it would in Belgium. On free 
trade principles, the government was perfectly right. '' Buy where you can 
buy the cheapest," is the first maxim for governments and for peoples, 
laid down by their English exponents. But there is a difference between 
" your ox " and *' my bull." The English correspondent of an American 
paper tells us how Englishmen took the news of this commission : — 

" So far as I can ascertain little sympathy dwells in the English heart 
towards the commission. Pecuniary advantages when opposed to national 
advantages must ever be ousted. And I think, with many others, that 
the present is a question wherein the former would operate antago« 



WILL ENGLAND PERSIST? 287 

nistically towards the latter. If government specifications were distrib- 
uted exclusively amongst our foreign competitors, they and their workmen 
would proportionately swell in opulence and manufacturing supremacy 
in the departments embraced, as ours descended. Further, it is regarded 
as most significant that a Tory government should have ventured even 
upon a preliminary investigation of the policy of going out of the country 
for government iron. "We are now thirty years from 1844. What would 
have been thought of the prophet who should have committed himself to 
the prophecy that in 1874 Mr. Disraeli would seriously think of buying 
foreign iron for our own ships of war ? To buy foreign bread for our own 
mouths was considered bad enough, but to buy abroad our very bulwarks 
would have been thought absolute treason." 

§ 268. Will England persist? Possibly she will. Her 
middle classes, at least, retain their faith in the sacredness, the 
almost divinity of free competition, and their belief that the 
sphere and duties of government extend no farther than to keep- 
ing each man's hands off his neighbor's throat and pocket. With 
Mr. Gladstone, they pity the benighted protectionists abroad, as 
a zealous Christian pities the heathen. " I venture,'' he says 
in 1871, "that there is not the prevalence of enlightened views 
upon the subject that we desire in America; although it has a 
strong free trade party, yet the prevalence of these opinions is 
by no means assured. In our own colonies — I say it with deep 
regret — in our own colonies there are very strong and consider- 
able tendencies towards the establishment of what we call the 
exploded system of protection. I also must say, and it is with 
much pain, that the course of affairs in France is very different 
from that which we wish it to be." They still exult in the con- 
sciousness that they, and they alone, have found the key to all 
industrial problems, and lament the invincible ignorance of 
political economy that prevails in the United States (^Spectator, 
187-4) and other protectionist countries. As this class gives us 
pretty nearly all the English literature of our days, it is the 
common impression that there is no dissent from its teachings. 

" It would seem as though we free traders had become nearly as bigoted 
in favor of free trade as our former opponents were in favor of protection. 
Just as they used to say, * We are right : Why argue the question ?' so 
now, in the face of the support of protection by all the greatest minds in 
America, all the first statesmen of the Australians^ we tell the New Eng- 



288 ELEMENTS OF POLITICAL ECONOMY. 

land and the Australian politicians that * We will not discuss protection 
with them, because there can be no two minds about it among men of in- 
telligence and education. We will hear no defence of national lunacy,' 
we say. If, putting aside our prejudices, we consent to argue with an 
Australian or American protectionist, we find ourselves in difficulties. As 
far as we in our island are concerned it {i. e. free trade) is so manifestly 
to the pocket interest of almost all of us, and at the same time on account 
of the minuteness of our territory, that for Britain there can be no danger 
of a deliberate relapse into protection." — Dilke's Greater Britain. 

§ 269. But the Reform Bill carried by Mr. Disraeli in 1868, 
by establishing household suffrage, has effected a second trans- 
fer of power in England, to wit: from the middle to the lower 
classes. The latter gave no hearty support to the great agita- 
tion for the abolition of the corn laws. Ebenezer Elliott, the 
poet of that struggle, wrote in 1849, " It is remarkable that 
free trade has been carried by the middle classes, not only with- 
out the assistance of the working classes, but in spite of their 
opposition." Senior expressed his fear that if the extension of 
representative government should increase the power of public 
opinion over the policy of nations, " commerce may not long be 
enabled to retain even that degree of freedom which she now 
enjoys." Chalmers says : " This is a subject on which the popu- 
lar and philosophic minds are not at all in harmony," and ex- 
presses the same fear as Senior does, as to what would result 
from "the very admission into Parliament of so large an influ- 
ence from the will of the humbler classes." Kingsley speaks of 
the artisans of the great cities as '^ sneering and growling at Mr. 
Cobden's harangue — ' Cheap bread ! curse him, he means cheap 



wages I 



1' '> 



§ 270. What direction will this new political element, as it 
gradually makes itself felt in Parliament, give to legislation, 
especially as regards economical matters ? English students of 
its tendencies say that (1) it will be intensely Nationalist. It will 
insist on the nation having a foreign policy of its own; it will 
fight when its blood is up, whether Manchester suffers or not. 
It will look at matters through English spectacles, not cosmopo- 
litan ones, and trust more to national instincts and impulses 
than to fine-spun theories. A Parliament, then, that really 



THE LOWER CLASSES IN POWER. 289 

represented this class would not sit with folded hands and see 
Macclesfields and Coventrys go to ruin, because somebody had 
made a book argument about free trade that was thought unan- 
swerable. (2) The theory of government held by this class is 
very different from the Laissez /aire notion of the class just 
above it. It has not been the vigorous, strong, prosperous part 
of society that chiefly wanted the state to get out of its way. 
Rather it has been in great need of a helping hand from the 
constituted authorities. The state (apart from the policeman, 
to whose functions the " let alone " school would reduce govern- 
ment) has mostly been the workingman's best friend and pro- 
tector. He has no scruples and no grudges about giving it 
pretty large scope of action. If any one will make it pretty 
clear to him that the drift of legislation can help him to more 
work and better pay, he will look for that help. (3) Being 
themselves very directly a producing class, they are not so 
likely to see the axiomatic force of the free trade maxims : 
" Every man's interest as a consumer is the interest of society ; 
every man's interest as a producer is the interest of a class. 
Let all legislation be for the good of the consumer, because his 
interest always represents the interests of society and the good 
of the whole nation " 

The ao-itation ajrainst free trade which beiran in England amoncj 
the working classes soon after the American Civil War has spread 
also to the farming class, under the stress of American competi- 
tion. It is still confined to a minority, but the minority is grow- 
ing ; and this issue has sufficed to decide several elections of 
members to the Imperial Parliament. It does not want for rep- 
resentatives among the intellectual classes, and it is admitted that 
Mr. Cobden's work is now subjected to an amount and degree of 
criticism which would have been thought quite impossible at the 
time of his death. The main answer to the protectionists is that 
they can propose nothing which will furnish any practical solu- 
tion of the diificulties they complain of Mere protection will 
certainly do nothing for England, unless as accompanying meas- 
ures to restore the English people to the use and enjoyment of 
19 



290 ELEMENTS OF POLITICAL ECONOMY. 

the land of England (§ 86). Protection is useful only as it tends 
to a healthy equilibrium of the industries (§ 33). At the time 
of the Reformation two to one of the English people were en- 
gaged in agriculture. At present the proportion is less than one 
to three, a sixfold change in three hundred years. For this dis- 
aster the " Fair Traders " have no remedy. They propose a sys- 
tem of retaliation, which England cannot afford and her working 
people would not endure. The land question is everything, and 
there is needed, not a break-up of the great estates, but a return 
to small farms. 

§ 271. The colonies who form part of the British empire 
are as slow to adopt the English theory as are industrial nations 
nearer home. Canada until 1879 imposed a tariff for revenue 
upon imported manufactures, which fostered a few of her weaker 
industries, and thus excited unfriendly comment in England. Her 
policy was sketched as follows by Mr. (now Sir Alexander) Gait, 
her Finance Minister, in a speech made in England in 1859: "The 
fiscal policy of Canada has invariably been governed by the amount 
of revenue required. It is no doubt true that a large and influ- 
ential party exists who advocate a protective policy; but this 
policy has not been adopted by either the government or the 
legislature, although the necessity of increased taxation* for the 
purposes of revenue has to a certain extent compelled action in 
partial unison with their views, and has caused more attention 
to be given to the proper adjustment of the duties, so as neither 
unduly to stimulate nor depress the few branches of manufac- 
ture which exist in Canada. . . . The government have no 
expectation that the moderate duties imposed by Canada can 
produce any considerable development of manufacturing indus- 
try ', the utmost that is likely to arise is the establishment of 
works requiring comparatively unskilled labor, or of those com- 
peting with America for the production of goods which can be 
equally well made in Canada, and which a duty of twenty per 
cent, will no doubt stimulate." So willing was the Canada of 
that day to serve as an appendage to the industrial system of 
England. 



Canada's passive policy. 291 

Three years later (1862) Mr. Gait assured the Manchester 
Chamber of Commerce that Canada had no purpose to close its 
market on them. " The best evidence that could be offered 
against the charge of Protection was that the eifect of the 
tariff had not been to produce manufactures. The manufac- 
tures of Canada were those that might be expected in a new 
country — nails, steam-engines, coarse woollens, and other arti- 
cles necessary in a newly settled country. There was not at this 
moment a single cotton-mill in Canada, nor a silk manufactory. 
The imports of earthenware and glass, hardware and iron, had 
gone on increasing every year from 1859 till the present year." 

Even this meekness was not enough ; he was asked why 
Canada did not raise her revenue by direct taxation on land and 
income ; these revenue duties had been thrown in their teeth in 
Europe. It had been said : " Can you expect us to throw off 
all duties on British goods, when your own colonies tax them 
fifteen per cent?" He retorted that such questions would come 
with better grace if England did not raise £28,000,000 a year 
by customs, and £17.000,000 by excise duties. Direct taxation 
might be best; but it was also a luxury that a poor and thinly- 
settled country could not indulge in. 

Knowing that a mere passive policy was not sufficient to build 
up a new country, Canada pursued with zeal and energy the tra- 
ditional policy of directly aiding immigration from the Old 
World, instead of attaining the same end indirectly by making 
the Dominion a place eminently well worth settling in. She 
used the money raised by taxation to pay the expense of these 
new-comers ; if she had taxed foreign productions at a higher 
rate, they would have come without her help. But she was " all 
the time pouring water into a cask with a hole in it. Allowing 
for great exaggeration in the reported numbers of French-Cana- 
dian emigrants to the United States, we fear that for two emi- 
grants whom, with much expense and with great labor, we bring 
over, we probably lose three. But little account is taken of the 
emigrants who are lost, because they are mainly withdrawn from 



292 ELEMENTS OF POLITICAL ECONOMY. 

manufactures, and agriculture is the government's sole care" 
(^Canadian Monthly^. 

Canada had bought in the cheapest market and sold in the 
dearest that she could find, with no thought of creating better, 
nearer and steadier markets than any she could find ready- 
made. Her wise marketing did not prevent her from being 
a poor and backward country. She did the easiest thing, and 
made no sacrifices from the first j had lived from hand to mouth; 
was wise with her pennies and foolish with her pounds; saved 
at the spigot and wasted at the bung. And, therefore, the tide 
of population moved over her border into the United States — 
away from the land of low taxation and free choice of markets 
to the land of high taxes and home markets. She could not 
keep the Europeans who came into her ports with half a mind 
to stay. Her own people sold land and houses at a sacrifice, and 
sought a home in New York and New England. 

" By describing one side of the frontier," says Lord Durham 
in a celebrated report, " and reversing the picture, the other 
would be described. On the American side all is activity and 
bustle. The forest has been widely cleared ; every year numer- 
ous settlements are formed, and thousands of farms are created 
out of the waste ; the country is intersected with common 
roads On the British side of the line, with the excep- 
tion of a few favored spots, where some approach to American 

prosperity is apparent, all seems waste and desolate The 

ancient city of Montreal, which is naturally the capital of 
Canada, will not bear the least comparison, in any respect, with 
Bufi'alo, which is the creation of yesterday. But it is not in the 
difference between the large towns that we shall find the best 
evidence of our inferiority. That painful but most undeniable 
truth is most manifest in the country districts, through which 
the line of natural separation passes, for a distance of a thou- 
sand miles. There on the side of both the Canadas, and also 
of New Brunswick and Nova Scotia, a widely-scattered popula- 
tion, poor and apparently unenterprising, though hardy and 
industrious, separated from each other by tracts of intervening 



CANADA WANTS RECIPROCITY. 293 

forests, without towns or markets, almost without roads, living 
in mean houses, drawing little more than a rude subsistence 
from ill-cultivated land, and seemingly incapable of improving 
their condition, present the most instructive contrast to their en- 
terprising and thriving neighbors on the American side 

Throughout the frontier, from Amherstburgh to the ocean, the 
market value of land is much greater on the American than on 
the British side. In not a few parts this difference amounts to 
a thousand per cent I am positively assured that supe- 
rior natural fertility belongs to the British side. In Upper 
Canada, the whole of the great peninsula between Lakes Erie 
and Huron, comprising nearly half the available land of the 
province, is generally considered the besfgrain country of the 
American continent." 

In 1856-1866 we had a treaty of reciprocity with Canada. 
She admitted free a few of our coarser manufactures, on condi- 
tion that we should throw open our markets to her agricultural 
products. When the arrangement was made it was not very 
unfair, but it became so after the adoption of the protective 
policy by America in 1861. When the time fixed for its ex- 
piry came, America refused to renew it, and has repeated that 
refusal as often as it has been asked. 

A much broader proposal than that for reciprocity has been 
made on both sides of the border. Canada and America are parts 
of a great area which seems to be designated by nature for unre- 
stricted intercourse. Each of the three groups of provinces of 
which the Dominion is composed has closer relations naturally 
with the adjacent American States than with the other provinces. 
The customs line which sunders the two countries is excessively 
costly to both. A customs-union, if eflPected on the basis of a 
common protective tariff, with distribution of receipts propor- 
tionally to population, would bring Canada into closer relations 
to the continent to which she belongs naturally, while it would 
enable both countries to confine their custom-house line to the 
seashore. 



294 ELEMENTS OF POLITICAL ECONOMY. 

The possibility of such an arrangement has been increased by 
the adoption of. a Canadian protective tariff in 1879. In that 
year the Tory party, then in opposition, took up this issue at the 
general election, and, to their own surprise and that of their ene- 
mies, secured a working majority in behalf of this national policy. 
Of course manufactures carried on within so small an area and 
for the benefit of so small a population as that of Canada cannot 
be expected to exhibit the rapid and vigorous growth which is 
seen in those of America. But already the new tariff has done 
much for the welfare of the Dominion in diversifying her indus- 
tries, furnishing employment for her surplus labor, and bringing 
the farmer and the artisan into close and helpful relations. 

See Isaac Buchanan, M. P., On the Industrial Resources of America 
(Montreal, 1864), a chaotic compilation edited by Henry J. Morgan. 
Mr. Buchanan is the leading Protectionist of the Dominion, and belongs 
to the school of Henry C. Carey. The most original and able writer of 
the party, known to us, is John Maclean {Free Trade and Protection, 
Montreal, 1868). 

§ 272. The Australian colonies have been much more decided 
and independent than those of British America, a fact largely 
due to the enterprising, wide-awake character of the popula- 
tion, whom the gold discoveries took thither. They have made 
fair trial of free trade, which they now scout as "an antipodean 
doctrine," while protection is their national creed. It commands 
an ever-increasing majority in the colonial legislatures ; it is the 
avowed principle of " all their first statesmen ;" it is especially 
the doctrine upheld and acted upon by the liberal and progres- 
sive party, while the old sheep-farming aristocracy are at once the 
Conservative and the Free Trade party. The policy of cherish- 
ing a varied industry is drawing the colonies closer together, and 
has led to the first steps towards a Federative Union. Ail 
classes but one are full of enthusiasm for the industrial inde- 
pendence of Australia. '' No British Goods Sold Here" is 
the sign by which an Australian tradesman wooes popularity 
and custom. Dishonest dealers tear off the British labels from 
imported goods, and substitute one which marks them as 
Colonial make. This people are straining every nerve to 



AUSTRALIA HAS REASONS. 295 

develop a varied industry and bring the farmer and the artisan 
into neighborhood ; they have no idea of keeping up workshops 
at the antipodes. They " would rather import that which 
should produce the commodities than the commodities them- 
selves." They want a free trade that will not mean the " mono- 
poly for British manufactures," " and their chief object is to 
put down monopoly by extending the sphere of competition." 

§ 273. " But you are taxing your consumers for the benefit of 
the producers. As well break all the windows in your houses in 
order to keep glaziers in work." No proof that a percentage of 
loss is incurred by protection deters them. " A digger at Bal- 
larat told me that he knew that under a protective tariff he had 
to pay higher for his jacket and moleskin trousers, but that he 
preferred to do this, as by so doing he aided in building up in 
the colonies such trades as the making up of clothes, in which 
his brother and other men, physically too weak to be diggers, 
could gain an honest living. . . The Australian diggers and 
western farmers of America are setting a grand example to the 
world of self-sacrifice for a national object" (Dilke). 

" Australia is but a young country yet, with plenty of avail- 
able land for settlement; with exuberance of resources, mineral 
and agricultural; and hitherto not greatly overburdened with 
population ; and that, too, of a class consisting probably of a 
smaller number of the physically incapable than any other coun- 
try in the world. Yet for years past the great difiiculty has been 
to find employment for the rising generation. The question of 
tariffs there has been eminently a social one" (Syme). It is a 
fact known to the present writer that immigration thither from 
the North of Ireland was deterred by the reports which came 
back that fathers of families in very comfortable circumstances had 
sent their sons to sea in despair of finding work for them. The 
Australians found that " their youth was growing up in a 
state of semi-barbarism, without education, without employment, 
and without hopes for the future," while their country was be- 
coming '' a huge sheep-walk." 

§ 274. Those who are familiar with the facts of the com- 



296 ELEMENTS OP POLITICAL ECONOMY. 

mercial history of Australia are not so ready to admit that her 
people are making their own goods at a loss. (1) The Austra- 
lians are much less at the mercy of speculators than when they 
depended entirely upon a distant market, and by consequence 
they are now in so far free from the vast fluctuation in prices 
produced by "forestalling the market" or " getting up corners." 
*' There is scarcely a commodity imported into Australia but has 
at one time or another been manipulated in this fashion. The 
practice is carried on in the most systematic manner. There are 
individuals there who make it their special study to create an 
artificial scarcity. No sooner is there the slightest prospect of 
even the most temporary deficiency in the supply of any com- 
modity, than some one immediately begins to buy up every 
parcel in the market and every shipment to arrive. Once in pos- 
session of the bulk of available stock, he is in a position to de- 
mand his own price from the consumers " (Syme). 

Hittell's Eesourcea of California (p. 333), gives an account of the same 
system as pursued on the Pacific coast. 

(2) Australia, like other countries that did not manufacture, 
was not ordinarily furnished with goods at the lowest price that 
her British friends could sell them for, but whenever she tried 
to begin their manufacture she got them " at a sacrifice." She 
had tallow in abundance and all the materials to make soap and 
candles; her people repeatedly undertook to make them, and it 
was found that they could do so at prices much below the ordi- 
nary price of the imported articles. But no sooner was this 
known in England, than large shipments of soap and candles 
were thrown upon the market at prices with which the home 
manufacturer could not compete. One maker after another was 
crushed by the unequal competition, until the Victoria tariff of 
1871 took this industry under protection. 

Again, Australia produces maize, while England has to im- 
port it. Yet maizena, a well-known preparation from that 
grain, was imported from England and sold for a shilling a 
pound. A native firm began its manufacture and sold it at five 
pence, and afterwards at two pence per pound, but has had a 



IRELAND'S PASSIVITY. 297 

hard fight with foreign competition, and would have been 
swamped but for the confidence in success that buoyed them up 
against losses. 

Again, Victoria produces vast quantities of very superior 
wool, yet in 1870 the importation of woollens amounted to 
£817,087. A factory at Geelong earned a fair dividend and a 
high reputation by the manufacture of a class of tweeds, which 
wore well. A Yorkshire firm got a sample of the fabric and 
made a cheap and inferior imitation of it, with which the 
colony was soon flooded. • The factory would have been closed 
had not the legislature imposed a protective duty upon all im- 
ported cloths, and the colony is now spinning and weaving its 
own wools at a rate that will soon make it independent of 
Yorkshire. 

These are not the only cases. An old colonist declared at a 
public meeting in Sydney, that he " had seen a large number of 
industries perish in this country, not because they had not in- 
herent strength, but because they had been strangled, as it were, 
by the competition of other countries, . . . Unless a man had 
a very strong back, he could not bear up against them till he 
could establish his industry.'^ 

See Sir Charles Dilke's Greater Britain, bnt especially "Restrictions on 
Trade: From a Colonial Point of Vieio," by David Syme. Republished 
Boston, 1873. 

§ 275. Two of England's dependencies — Ireland and India — 
have had no discretion as to the direction of their economic 
policy, — no power to set up barriers against the beneficencios of 
free trade. Both of them have been, throughout the period of 
their relation to her, relatively inferior in capital and skill, and 
both have illustrated the result of free competition between 
nations so situated. 

Ireland possesses many natural advantages, but labors under 
the absence of others. Acre for acre her soil is better than that 
of England, but her immense rainfall — in some places in the 
west it rains two hundred days in the year — renders grain-farm- 
ing gambling. Since the failure of the potato crop, she has been 



298 ELEMENTS OF POLITICAL ECONOMY. 

chiefly dependent upon green crops and dairy farming, and she 
is unsurpassed in both. She has mines of gold, silver, and iron, 
but very few of coal ; a great geological convulsion seems to have 
stripped her of her coal measures, paring the top from the 
island and leaving bare the vast limestone plain, intersected with 
peat bogs, which forms its centre. But English coal can be 
put down on her seaboard as cheaply as in the south of Eng- 
land ; more cheaply than in France. Her vast area of fine pas- 
ture land and her peculiar climate, render the wool of her sheep 
exceptionally fine, and therefore for centuries back in great de- 
mand to mix with the coarse wools on the Continent. But her 
wool is not woven and spun at home ; she exports it together with 
large quantities of food. Her Celtic people are of the same blood 
with the French across the Channel, and possess the same capa- 
city for the development of fine taste, and the artistic feeling for 
form and color ; but these lie undeveloped while they remain at 
home. The Irishman only flourishes after being transplanted 
from his native soil, although he feels for that soil the most pas- 
sionate attachment. His qualities as a workman, which have 
been so abundantly useful in our country, lie dormant at home. 
§276. The spirit in which the English government and 
people used to deal with Irish industry finds its most striking 
illustration in the suppression of the woollen manufacture at the 
close of the seventeenth century. The manufacture of woollens 
and linens began very early ; under Henry VIII. the importa- 
tion of Irish woollen thread was prohibited. Under Charles I. 
Wentworth used all his tyrannical energies to suppress the 
woollen manufacture, and promote that of linen. The over- 
throw of the King and his party left the Irish free to spin and 
weave what they would, and not till after the Revolution of 
1688 did the complaints of the English manufacturers induce 
the government to restrict them from producing woollens for the 
supply of the home market. The English House of Lords 
(1698) took the initiative, and begged the King to take measures 
to confine the Irish to the linen trade, as the rapid growth of 
their woollen trade was drawing English spinners and weavers 



IRISH WOOLLEN INDUSTRY STRANGLED. 299 

to Ireland. The House of Commons followed, and the King 
promised to do what was desired. The Irish Parliament was in 
110 sense a body that represented the nation ; they imposed a 
prohibitory duty on the export of Irish woollens, while the 
English Parliament prohibited their export save from six 
Irish to six English ports. Irish industry received a shock 
from which it never recovered, and even English industry felt 
the recoil. The wool-workers flocked over into England, and 
overstocked the labor market, or by competing for the trade, 
cut down the profits. Others took their skill and industry to 
the Continent, and contributed to the improvement of the 
foreign factories. A great part of the people were thrown out 
of employment, or thrown back upon farming, and the era of 
rack-rents began. " Upon the determination of all leases made 
before 1690," says Dean Swift, " a gentleman thinks he has but 
indifi"erently improved his estate if he has only doubled his 
rent roll. Farms are screwed up to a rack-rent — leases granted 
but for a terra of years — tenants tied down to hard conditions, 
and discouraged from cultivating the land they occupy to the 
best advantage by the certainty they have of the rent being 
raised, on the expiration of their lease, proportionably to the 
improvements they shall make." The value of Ireland as a 
customer for English goods was very greatly diminished ; where 
once they had bought large quantities of the better wares, they 
now took only the coarser, and in small amounts. Well might 
Swift, with savage wit, refuse to respond to the toast, " Ireland's 
Prosperity," on the ground that he " never drank to memories." 
" Ireland," he wrote in 1727, " is the only kingdom I ever heard 
or read of, either in ancient or modern story, which was denied the 
liberty of exporting their native commodities and manufactures 
wherever they pleased, except to countries at war with their 
own prince or state; yet this privilege, by the superiority of 
mere power, is denied us in the most momentous parts of com- 
merce." With every generation her trade declined, except that 
in linen, conducted chiefly by the Scotch and English colonists 
in the three north-eastern counties, where the streams are so 



300 ELEMENTS OF POLITICAL ECONOMY. 

richly charged with natural salts that they will bleach without 
the addition of chemicals. Even this was envied; in 1785 
Manchester sent up a petition with 117,000 signatures, asking 
the prohibition of Irish linens. The implied pledge made to 
foster the Irish linen trade was never kept ; bounties were given 
to English and Scotch producers only. But the Irish maker 
held his own, and the annual value of Irish linen is now half 
that of the rental of the kingdom. 

§ 277. This act was but the worst of many conceived in the 
same spirit. The export of cattle to England in 1663 was pro- 
hibited in order to protect the English breeder. The manufac- 
ture of glass was put down in the same way as that of woollens. 
" The easiness of the Irish labor market and the cheapness of 
provisions still giving us the advantage, even though we had to 
import our materials, we next made a dash at the silk business, 
but the silk manufacturer proved as pitiless as the woolstapler. 
The cotton manufacturer, the sugar refiner, the soap and candle 
maker (who especially dreaded the abundance of our kelp), and 
any other trade or interest that thought it worth its while to pe- 
tition was received by Parliament with the same cordiality, until 
the most searching scrutiny failed to detect a single vent for the 
hated industry of Ireland to respire'^ (Lord Dufferin). The 
country was forbidden to trade with the East, with the Mediter- 
ranean, with the Colonies. 

Not till the rising of the Irish Volunteers in 1778, and the 
consequent concession of the independence of the Irish Parlia- 
ment in 1783, was the weaker island treated as possessed of any 
industrial rights that the stronger was bound to respect. From 
that period till the Union of 1801, Ireland had control of her 
own industrial policy, and one of the first uses that she made of 
it was to impose a duty upon the importation of certain English 
goods which it was felt could be made as well at home. Those 
eighteen years were a time of rapid industrial growth; Irish 
manufactures began to show themselves. " There is not a 
nation on the habitable globe,'' wrote Lord Clare in 1798, 
*• which has advanced in cultivation and commerce, in agricul- 



THE INFAMOUS UNION. 301 

ture and manufactures, with the same rapidity in the same 
period." But one of the provisions of the infamous compact 
which terminated the country's legislative independence, was 
the gradual removal of these duties. Those on cotton goods 
were to be removed between 1808 and 1821 ; those on woollens 
by the latter date; that on cotton yarn in 1810. As the pro- 
cess went on, the Irish factories closed with the same beautiful 
regularity. The protected silk, flannel, stocking, blanket and 
calico manufactures of Ireland are now extinct. By 1840 the 
woollen manufacturers of Dublin had fallen off from ninety-one 
to twelve ; their workmen from nearly 5000 to about 600 ; wool- 
combing and carpet-weaving was almost gone. Six thousand 
weavers and combers in Cork were reduced to 478 by 1834. 

Once again the people were thrown back upon the land ; the 
merciless competition of British capital was as effective as the 
merciless legislation of the English Parliament; English Free 
Trade undersold Irish manufactures out of existence, and 
reduced the Irish people to the uniformity of a single employ- 
ment. The only field of enterprise left was competition for the 
possession of a few acres, as the last refuge from starvation. 
" Some well-meant but vain attempts have been made from time 
to time to promote manufactures in the country, in the form of 
what is called an Irish manufacture movement, that is, an agita- 
tion to induce a general undertaking or resolution to use articles 
of Irish manufacture rather than English, without reference to 
their relative quality or cheapness" (J. N. Murphy). But in 
vain ; because the people had no power to " give effect to their 
judgment respecting their own interests," all attempts at such 
concert being ineffectual, " unless it receives the sanction and 
validity of a law" (Mill). " It is well known that almost all 
the manufactured articles used in Ireland, save lioen, are 
British or foreign products. There are British and French 
millinery and silks ; British, French, Danish and Hungarian 
gloves; English soap, candles, ironmongery, hardware and 
glass ; in fact, almost everything in use by rich and poor — all 
imported and paid for by Irish raw agricultural product" 



302 ELEMENTS OF POLITICAL ECONOMY. 

(Murphy). England has 740 occupations relating to trade, com- 
merce and manufacture; little Scotland 501 ; Ireland only 261. 

§ 278. " Some human agency must be accountable," says 
Lord Dufferin, " for the perennial desolation of a lovely and 
fertile island, watered by the fairest streams, caressed by a clem- 
ent atmosphere, held in the embraces of a sea whose affluence 
fills the noblest harbors of the world, and inhabited by a race — 
valiant, generous, tender — gifted beyond measure with the 
power of physical endurance, and graced with the liveliest intel- 
ligence." 

Many are the solutions ! 1. "The Irish are an idle, thriftless 
race," says prejudice. Their record in the colonies and in 
America, as in England itself, disproves the slander. " We 
are apt to charge the Irish with laziness," says Swift, " because 
we seldom find them employed ; but then we don't consider 
that they have nothing to do." " They are priest-ridden, ig- 
norant Catholics," says bigotry. They bring their religion with 
them to new fields of labor, but it does not prevent their pros- 
pering. They are of the same creed as the industrious and 
prosperous Belgians; of the same race and creed as the French. 
" They are turbulent; the country is so disturbed by popular out- 
rages, that capital shrinks from Ireland as a field of investment," 
say the lovers of peace and quiet. It is admitted that Ireland 
is disturbed because of the poverty and misery of the people. 
It is a miserable circle, if the efiects of their misery are such as 
to prevent the application of the remedy. Is not the effect put 
for the cause here ? 

2. " The misery of Ireland arises from the excess of her 
population," say the old-fashioned economists. Between the 
Union and the Famine (§ 66^ the rate of increase of popula- 
tion in Ireland was less than in England ; since that date there 
has been a decrease of one-third through emigration, without 
any corresponding improvement in the condition of the people. 
Although England consumes over fifty million bushels of grain 
in the manuficture of liquor, she manages to feed, in ordinary 
years, two-thirds of her population or fourteen and a half mil- 



WHY IS IRELAND POOR? 803 

lion people — taking the census of 1868 — on the produce of 
twenty-five and a half million acres of arable land. Belgium 
on six and a half million acres feeds nearly five million people. 
Ireland with fifteen and a half million acres of better laud than 
cither England or Belgium can show, is overpopulnted with a 
people that number something over five and a half million 
souls ! " But since the famine and emigration brought down 
the numbers, things are much better in Ireland. Mr. Disraeli, 
you know, says that the ' famine did more for Ireland than a 
long succession of statesmen had been able to do//' The fam- 
ine and emigration did reduce the population from something 
like eight millions to the present figures, a decline of 32 per 
cent. But the best judges pronounce that this reduction has 
efi*ected no material improvement in the condition of the peo- 
ple, which is improving only where the farmer and the artisan are 
in neighborhood, and where the farmer sells his crop to his 
neighbors, i. e., in the three or four north-eastern counties. Every- 
where else, the Irishman at home is " selling the hide for six- 
pence and buying back the tail for a shilling/' " The dispropor- 
tion of the opportunities of employment to population," as Lord 
Dufferin expresses it, is the real state of the case ; not the dis- 
proportion of natural resources and land to the population. 
But this explanation confesses judgment against those who have 
control of the industries of Ireland. For the rapid and enor- 
mous multiplication of any people, if it outrun the development 
of their industrial resources, is a proof and a cousequence of the 
wretchedness and poverty that first made them reckless and 
liopeless. It is the well-to-do workman, the one who has a 
social standing and prospects, that considers his ways. 

See ^ 68, note. The only evidence we can find for the assertion of a rapid 
increase in the population is the fact that the Registrar-General reported 
an enormous birth-rate in Ireland. But the ofiBcial figures of the Irish 
census show that this must have been balanced by a still more 
enormous death-rate, as indeed is highly probable (^ 71). Yet Mr. 
Mill gives from Quetelet a table of annual increase which puts the 
Irish rate far higher than that of England, and indeed the highest in 
Europe. 



304 ELEMENTS OF POLITICAL ECONOMY. 

§ 279. 3. " The misery of Ireland arises out of the wretched 
system of land tenure," say the new-fashioned economists, 
Mr. Thornton and his disciples; "her people are reduced to 
tenants at will, they are rack-rented ; they have no inducement 
to improve their land, because the better they make it, the 
higher the rents will go. They hide their savings from the 
landlords, and get two per cent, interest on them, instead of 
putting them into the land. They need security of tenure and 
compensation for unexhausted improvement. Till they get them, 
as Mr. Caird says, ' what the ground will yield from year to year, 
at the least cost of time, labor and money, is taken from it.' " 
The inference is that the Irish landlords, and the middlemen to 
whom they let their properties, and who again sublet it to the 
farmers, have been the vampires who have destroyed Irish 
prosperity, and driven her people beyond the seas. But where 
the same land tenure has coexisted with manufactures the 
people have prospered ; and where the two have not been asso- 
ciated, the landlord has often been broken in fortune as well as 
the tenant. The commissioners sent out to relieve the sufferers 
by the famine, found in the Connaught poor-houses men of 
estate and family, who had served as the High Sheriffs of 
their counties. One-third the landlords of Ireland were swept 
away in the common ruin. A very large portion of the land 
of Ireland has changed hands in late years ; £25,000,000 
worth in the ten years (1849-1859), during which the Encum- 
bered Estates' Court sat in Dublin. Of the estates thus sold, 
the ownership was often only nominal ; the landlord an unpaid 
pensioner on his own laud. And it is a mistake to suppose 
that rack-rents are necessarily high, except in relation to the 
means of the tenant, " The rents of Ireland are comparatively 
low. This, I believe, is generally admitted, though there are 
flagrant exceptions ; even a rent that is absolutely low, may be 
beyond the means of an indigent or unskilful tenant" (Lord 
Dufferin.) They are in fact much lower than farmers with the 
command of a home market easily pay in other countries; much 
higher than the Irish farmer can often afford. 



THE IRISH LAND-MARKET. 305 

After all, what is the charge brought against the Irish land- 
lords and their middlemen ? That they acted on the princi- 
pies of English Political Economy, and sold their commodity 
in the dearest market they could find. " The moral respon- 
sibility of accepting a competition rent is pretty much the same 
as that of profiting by the market rate of wages. If the first 
is frequently exorbitant, the latter is as often inadequate, and 
inadequate wages are as fatal to efficiency as a rack-rent is 
to production ; though each be the result of voluntary adjustment, 
it is the same abject misery and absence of an alternative which 
rule the rate of both. . . . The disproportion of the op- 
portunities of employment to population has resulted in univer- 
sal pressure and universal competition — competition in the labor 
market; . . . .competition in the land market only to be 
relieved by the application to more profitable occupations of so 
much of the productive energies of the nation as may be in 

excess of the requirements of a perfect agriculture 

How powerfully the development of manufactures in the North 
of Ireland has contributed to the relief of the agricultural 
classes of Ulster, by giving the tenant farmer an opportunity of 
apprenticing some of his sons to business, .... and by 
enabling the cottier tenant to supplement his agricultural earn- 
ings with hand-loom weaving, and by a general alleviation of 

the pressure upon the land, I need not describe 

Had Ireland only been allowed to develop the other innumera- 
ble resources at her command, as she has developed the single 
industry in which she was permitted to embark, the equilibrium 
between the land and the population dependent upon the land 
would never have been disturbed, nor would the relations be- 
tween landlord and tenant have become a subject of anxiety " 
(Lord Duiferin). But the Irish land laws of 1870 and 1881 
both seek to put a limit to the competition for land b}' legal 
restriction, rather than to put an end to it by removing its 
cause — ^by creating and cherishing a varied industry. They 
did so with eyes fully open to the source of this unhappy com 

petition. In the debate on the former Bill in the Commons 
20 



306 ELEMENTS OF POLITICAL ECONOMY. 

the line of argument adopted by the Government, according to 
The Spectator, was this : " Free contract implies free contract- 
ors ; however, partly from historical circumstances but cldejly 
from the absence of alternative employments, the poorer tenants 
of Ireland are not free ; at least half the adult population are 
compelled by the coercion of hunger to agree to any terms 
which will secure them the use of the soil. It is because they 
are not free that a penalty is afl&xed to capricious eviction, — 
that a court is to settle the terms on which leases must be 
granted, that even on the expiring of the lease, good-will is to 
revive like a plant out of the ground." On reading this, we 
are obliged to ask : Are there no resources at the command of 
statesmanship, by which these " alternative employments " 
could be called into existence, and the Irish problem 
solved without tampering with vested rights, and re- 
calling into existence that " system of limited, imperfect and 
half-developed rights, natural only to a low civilization," which 
all Europe has taken such trouble to be rid of. There is a re- 
source which has always been found fully equal to the occasion, 
but unfortunately it is called Protection. And from the most 
trusted leaders that the people of Catholic Ireland ever had, a 
demand for it has been distinctly made. 

" What sort of legislation would follow the establishment of a separate 
Irish Parliament, if any legislation at all, might easily be anticipated, 
if it were not distinctly foreshadowed in a tentative declaration of some 
Catholic clergymen, drawn with great ability for its purpose, and assur- 
edly not put forward without the private sanction of higher authority 
than it claims. It is enough to say it is declared that Political Economy 
will not do for Ireland, that the Irish manufacturer cannot compete with 
the English, and that the natural energies of the Irish people must be 
developed — that is to say, properly speaking, repressed — by Protection 
and prohibition" — (Cliflfe Leslie {Land Systemn of Ireland, England and 
the Continent, pp. 35-6.) Mr. Leslie recognises the fact that the absence 
of manufactures is a chief source of Irish poverty and retrogression. 
However, he believes that Ireland is not a manufacturing country, be- 
cause her land tenure laws are so bad that the capitalist cannot secure 
sites for factories, and he seeks to substantiate this reasoning by adducing 
some half-dozen cases of hardship. The land tenure is the same in 
England as in Ireland; the same in "Ulster as in Connaught. It was 



IRELAND'S "LACK OF CAPITAL." 307 

the same in 1783-1801 as it is now, when no such diflBculty as to the 
sites of factories was experienced. 

Did not the Gladstone ministry and their majority in Parliament " declare 
that Political Economy would not do for Ireland," when they resolved to 
set aside freedom of contract between landlord and tenant? "If Eng- 
lish landlords, millionaires anH economists have an economical convic- 
tion, it is in favor of freedom of contract. Yet a house led by the 
greatest of living economists has abandoned it. . . . The Bill does inter- 
fere directly with their claim to do as they like with their own 

Mr. Lowe, when taunted with his old economical arguments, acknow- 
ledged that the Bill was not intended to increase wealth, which is the ob- 
ject of Political Economy, but to save society" (Spectator). 

§ 280. (4) '' Ireland is miserable, wretched, unprogressive 
for lack of capital to undertake the industries that would give 
her people sufficient employment," says the practical man. 
Solomon anticipated him when he wrote, " The destruction of 
the poor is their poverty;" but of what use is it to tell the Irish 
people that the reason why they are so ill off is because they were 
not in the past able to lay by for the present, and therefore will 
not now be able to do so for the future ? " We frequently hear 
Irish aspirations after English capital ; and loud are the popular 
rejoicings when an Englishman settles in Ireland, with a few 
thousand pounds, to establish some branch of industry; and 
these rejoicings are not so much for the example he sets, as for 
the capital he brings with him. We find, too, the English press 
occasionally warning the people of Ireland not to frighten away 
by their turbulence English capital, which, if not so deterred, 
would be devoted to the development of Ireland, instead of be- 
ing sent for employment to the antipodes, — a warning which im- 
plies that Ireland must look outside herself for the capital neces- 
sary to develop her resources. . . . Capital may be defined as 
past labor laid by to aid future. . . . The capital of Great Bri- 
tain and other civilized nations has grown from weak and scanty 
beginnings. . . . The capital, or saved labor of any country, 
must in the ajrsregate come from the labor of that country. It 
cannot come from any other source. Another country will not 
supply it. Capital is not parted with unless in exchange for an 
equivalent. The more the labor of a country is productively 



308 ELEMENTS OF POLITICAL ECONOMY. 

employed, the larger will be the amount of its saved labor. The 
greater the activity of industry, the energy of production, the 
process of perpetual consumption and reproduction, the greater 
will be the capital created within the country" (J N. Murphy). 
But even savings are not capital unless they are reproductively 
employed in the country itself; and the productive classes of 
Ireland save large sums of money, for whose investment there is 
absolutely no opening in Ireland. An average of £16,000,000 
is deposited with the Irish banks at IJ per cent, interest, and 
is invested in the London money market by the bankers. And 
the amount of these savings would be very much greater, were it 
not for the vast number of the unemployed and unproductive 
class who live off the national income. These are the two ex- 
tremes of Irish society, — the landlords who draw incomes from 
Irish estates and spend them in Paris or Naples, instead of de- 
voting themselves, as captains of industry, to the development 
and improvement of their estates; the great host of beggars, 
paupers and dependent persons, who find nothing to do. and 
live in idleness ofi" the earnings of others, some of them inside, 
but most of them outside the workhouse. 

Even Lord Dufferin joins in this talk about Ireland's need of capital : — 
''Let capital overflow her soil, and though her superficial area remain the 
same, the stimulus to her powers of production would be equivalent to an 
accession of territory sufficient to support thousands in affluence, where 
at present hundreds find a difficulty in extracting a bare subsistence." 
Ireland has, and under any free trade regime would have, to compete 
with the industrial skill and the division of labor which has been the 
slow acquisition of centuries of English history. Irish labor is dear, as 
all unskilled labor is. As her people say, " their fingers are all thumbs" 
at manufacturing, and Lord Duflferin himself tells us that "even the tra- 
ditions of commercial enterprise have perished through desuetude." The 
nascent industries of Ireland would be "strangled in their cradle," 
unless the new capitalists had — as the Australian expressed it — "a pretty 
strong back" to bear up against the sort of competition that Manchester 
and Bradford, Sheffield and Birmingham would bring to bear upon them. 

§ 281. What will England do for Ireland ? Almost anything 
except protect her industry or repeal the Union and concede the 
" Home Ilule" that would enable her to protect herself. Every- 
thing, that is, but the one thing that will be of permanent use. 



JUDGE BYLES ON RESTITUTION. 30S 

She will even interfere with the rights of property, and put the 
competition of the land market under restraint. But she will 
suffer no restraints upon the market for cottons, woollens, hard- 
ware, soap, candles and glass; its conjpetitions are something 
unspeakably sacred, on which none may lay irreverent hands. 
And then, is not British prosperity bound up with the doctrine 
that men have the right to buy in the cheapest and sell in the 
dearest market, and do what they will with their own, — provided 
it is not land in Ireland ? Only one English voice is raised in 
protest : " The destruction of Irish industry by the ancient 
English policy is not only a case for repentance, but for restitu- 
tion, or at least compensation. Like other sinners, we are very 
willing to confess that we have done wrong; ready even to 
promise that we will do so no more. But a proposal that we 
should give any Irish industry, or even any English industry on 
Irish ground, a partial and temporary advantage, so as to place 
Ireland, as nearly as we can, in the same state as if she had al- 
ways been fairly treated, as an integral part of the empire — a 
proposal to make up for past delinquencies and really restore in- 
dustry to its natural channels — I say such a proposal, just and 
natural as it is, would at present be received in England with 
derision." ... If this were done " England's gain in the re- 
sult cannot be calculated. But she will be no loser even in the 
process. The wealth that native manufactures will at once pour 
into Ireland's lap will not be abstracted from the United King- 
dom, but created in Ireland " (Judge Byles). 

See SopMsms of Free Trade ; Chap. XVI. : " Free Trade for Ireland." 
Also Lord Dufferin's Irish Emigration and the Teutire of Land in Ireland f 
and Mr. J. N. Murphy's Ireland — Industrial, Political and Social. 

§ 282. India was a manufacturing country when English 
merchants first began to establish their factories or trading sta- 
tions along the coast of the Bay of Bengal. Down to quite a 
recent period a great trade in the fine cotton goods of India — 
"so fine that you can hardly feel them with your hand" — was 
carried on. " On the coast of Coromandel and in the Province 
of Bengal, when at some distance from a high-road or principal 



310 ELKxMKNTS OF POUTICAl. ECOXOMY. 

town, it is difficult to find a vilhige in which every man, w Lilian 
and child is not employed in making a piece of cloth. At pres- 
ent much the greater part of whole provinces are employed in 
this single manufacture," whose process '' includes no less than 
a description of the lives of half the inhabitants of Indostan " 
(Col. Orme, 1805). The manufacture was very ancient : "the 
weaver of Dacca on his clumsy loom produced in the days of 
the Roman empire that ' woven wind/ the transparent Indian 
muslin, — the human gossamer, of which a whole dress will pass 
through a finger ring. Any other nation than our own, I sup- 
pose, would have cherished the manufacture of a fabric, the 
most perfect probably in the whole world, and certainly the 
most ancient that can be specifically identified : had it fallen 
naturally into disuse, would have held a little state money well 
spent to preserve it. Not so we English. We have well-nigh 
annihilated the cotton manufacture of India. Dacca is in great 
measure desolate ; the population, from 300,000 has fallen to 
60 or 70,000 ', its most delicate muslins are almost things of the 
past. We imposed prohibitory duties on the import of Indian 
manufactures into this country. We imported our own at nomi- 
nal duties into India. The slave-grown cotton of America, 
steam-woven into Manchester cheap-and-nasties, displaced on 
their native soil the far more durable but more costly products 
of the Indian loom. ..." 

See J. M. Ludlow's British India, its Races and its nistory. Two vols. 
Cambridge, 1858. Also, his Thoughts on the Policy of the Croum toward 
India. London, 1859 j and Chapman's Cotton and Commerce of India. 

England brought India juster and cheaper government, an 
era of peace, lighter taxes and improved methods of manage- 
ment. But under the Christian rule of Britain the industry of 
the country has been blighted, and " the manufactures of India 
were, it may be said, completely ruined by a general lowering 
of import duties [in 1813] on articles the produce or manu- 
facture of Grreat Britain, without any reciprocal advantages 
being given to Indian produce or manufactures when brought 
home. Next, inasmuch as the sale of opium, — a government 



THE IDLENESS OF INDIA. 311 

monopoly in Bengal and Behar — was greatly impeded by 
the competition of free-grown opium from the native states 
of Malwa, prohibitory duties were imposed at all the Presiden- 
cies on" the latter, " and the native princes of Malwa were ac- 
tually induced to prohibit the cultivation of the poppy for British 
behoof, — being suitably bribed for thus ruining their own sub- 
jects " (Ludlow). By 1833 not a single piece of cloth was ex- 
ported from India, and for the ruin inflicted on its artisans Lord 
William Bentinck, the Grovernor-General, could find " no paral- 
lel in the annals of commerce/' English writers tell of " the 
enormous and undeniable falling oflF in the commercial activity 
of India ; the decay of those flourishing marts with which the 
whole coast was once studded; , . . the contraction, and in 
great measure the ruin of trade; the neglect of public works; 
the depreciation of agricultural produce;" which last 'Ms ob- 
served to be a marked feature of our rule. . . . The numerous 
local markets created by the existence of the native princes," 
and by the wide existence of a class that had other means of 
subsistence than farming, ^'and which, by serving as centres of 
money circulation, enhanced the value of produce on the spot, 
disappeared." " The trade of India is so trifling, as compared 
with its agriculture, that the trading classes, except the village 
bankers" or usurers, ''form a very small item" (J. M. Lud- 
low). " A great part of the time of the laboring population in 
India is spent in idleness. I don't say this to blame them in the 
smallest degree. Without the means of exporting the crude and 
heavy agricultural produce, and with scanty means, whether of 
capital, science or skill, of elaborating it on the spot, they have 
really no inducement to exertion beyond what is necessary to 
gratify their present and very limited wishes " (Chapman). 

In fine, there is nothing left in India save an impoverished 
agriculture and a lifeless trade. The Hindoo cotton-grower pro- 
duces the raw material to clothe hie countrymen ; but it reaches 
them by way of Calcutta and Manchester; the skill of his won- 
derful manufactures is being lost: He pays for the strip of 
cloth that covers his own nakedness twenty times the amount 



312 ELEMENTS OF POLITICAL ECONOMY. 

of cotton that it contains. To carry his cotton crop even to the 
river on bullocks costs on an average five cents a pound, and em- 
ploys vast numbers of the people and of cattle in laborious and 
unproductive work. He has lost the power of association with 
his fellows; no man needs or helps his neighbors; all need and 
help the foreigner only. " Half the human time and energy of 
India runs to mere waste," says Mr. Chapman ; and elsewhere 
he says that of the cultivable surface of all India one-half is 
waste. In 1831 the cotton weavers and merchants of Bengal 
petitioned the English Parliament for reciprocal fyee trade. 
They found their "business nearly superseded by the introduction 
of the fabrics of Great Britain into Bengal, the importation of 
which augments every year, to the great prejudice of the native 
manufacturers.'^ Knowing " the immense advantages which 
the British manufacturers derive from their skill in construct- 
ing and using machinery, which enables them to undersell the 
unscientific manufacturer of Bengal in his own country," they 
were " not sanguine in expecting to derive any great advantage 
in having their prayer granted ;" but with the meekness of the 
Bengalee they ask it " as a manifestation of your lordships' good 
will." 

Dr. Bowring, a leading champion of free trade, said on the occasion of 
this petition: — "It is a melancholy story of misery so far as they are 
concerned, and as striking an evidence of the wonderful progress of 
manufacturing industry in this country. Some years ago the East India 
company annually received of the produce of the looms of India 6,000,000 
to 8,000,000 pieces of cotton goods. The demand has now nearly ceased. 
In 1800 the United States took nearly 800,000 pieces; in 1830, not 4000. 
In 1800 1,000,000 pieces were shipped to Portugal ; in 1830 only 20,000. 
The poor India weavers are now reduced to absolute starvation ; numbers 
of them have died of hunger. And what was the sole cause ? The 
presence of the cheaper English manufacture, — the production by the 
power-loom of the article which they had been used for ages to make 
by their unimproved and hand-directed shuttles. It was impossible that 
they should go on weaving what no one would wear or buy." But at 
this very period the exportation of this better machinery, and even the 
inducing skilled artisans to emigrate, was forbidden under heavy penalties 
by English law. At the same time, as we shall see, every trade exercised 
in India, and every tool it employed, was heavily taxed. 



INDIAN REVENUES. 313 

Some feeble attempts to revive by mild protection the cotton manu- 
factures of India have latterly been made. One member of the Man- 
chester Chamber of Commerce, assailing the Canadian Tarifif (see g 271), 
toM Mr. Gait : " This part of the country has been very restive lately 
under the India duties of five per cent.," and another that '* Exactly tho 
same process is going on in Canada that led to the erection of cotton- 
mills in Bombay." The tariff in force at the era of the Rebellion taxed 
British cotton, silk and woollen goods, and metal goods, 5 per cent.; 
those of other countries twice as much; cotton yarn and twist from Eng- 
land 3J per cent. ; from other countries 10 per cent. This was changed 
in 1859 by abolishing the discrimination in favor of British goods, fixing 
the duty on thread and twist at five per cent., and putting a duty of 20 
per cent, on haberdashery, hosiery, millinery, and some other classes. 
Mr. Jas. Wilson, the founder of the Economist, becoming Finance Min- 
ister of India in that year, changed all duties on manufactured goods — 
including yarns — to 10 per cent. But the pressure of direct taxation has 
again forced a resort to high duties, and the people, with the co-operation 
of English capital this time, are again taking to manufacturing. Man- 
chester protests, but it can't be helped. The Spectator, edited by an 
Anglo-Indian, says that if the tariff be kept long enough these manu- 
factures will survive its removal ; but that as long as coal is dear, " and 
the habit of mavufacturing on a large scale is not yet formed," they 
would first languish and then die out under free trade. 

§ 283. The revenue from duties on imports being destroyed, 
the necessity of raising money to pay the British troops and 
officials, and carry on the government, led to a most oppressive 
system of taxation and the creation of monopolies. Former 
Indian governments drew the revenue from a land tax, at first 
payable in kind, but after the Mohammedan conquest exacted — 
at least in part — in money. The English adopted the same 
method, but (1) they carried it out with a thoroughness im- 
possible under any Oriental government, — with the hard rigidity 
of a Shylock. (2) They insisted on payment in money exclu- 
sively, forcing the tax-payer to find a market for his goods, and 
requiring the circulation of sums hitherto never employed in 
India, yet the value of Indian coin declined. Silver was nearly 
as valuable in India as gold in Europe ; but the establish- 
ment of absolutely free intercourse and competition with a 
European nation brought its value down to the European 
standard. On the other hand, the people were thrown into tho 



314 ELEMENTS OF POLITICAL ECONOMY. 

hands of the native usurers who had control of the great mass 
of the coin in circulation j these vampires form the only class 
that has prospered under English rule, and desires its con- 
tinuance. (3) The destruction of Indian manufactures has 
brought down the price of raw produce and food by removing 
the workshops of India to the British islands. It is by the 
export and sale of these, in a country till recently almost desti- 
tute of roads and means of transportation, that the land-tax is 
raised. In many instances, from 60 to 70 per cent, of the crop 
was thus employed, and outside the Deccan the average was fifty 
per cent. (4) The land-lax levied by the native princes was ex- 
pended in the neighborhood ; if in money, it was spent on articles 
of native manufacture. By the policy of centralizing the gov- 
ernment, the same fund was now expended mostly in distant 
parts of the country, and much of it in paying salaries in 
London, still more in the payment of high salaries to foreign 
officers " without root in the country, who either save money for 
the purpose of carrying it away, or spend it for the most part on 
articles of British growth and manufacture; they being more- 
over few in number and residing only in the chief towns " 
(Ludlow). " Formerly," the native would say, ^' the govern- 
ments kept no faith with their land-holders and cultivators, ex- 
acting ten rupees where they had bargained for five whenever 
they found the crops good; but in spite of all this zolm (op- 
pression) there were then more hurkut (blessings) than now. 
The lands yielded more returns to the cultivator, and he could 
maintain his family better upon five acres than he can now upon 
ten" (Col. Sleeman : Rambles in India). 

But this oppressive land-tax is not sufficient for the needs of 
the government, and monopolies have been created to supplement 
it. (1) When the English began the conquest of India, its 
people were noted for " their total abstinence from spirituous 
liquors and other intoxicating substances " (Warren Hastings). 
The government have set up distilleries, and supplied " arrack," 
a fierce alcoholic drink, to licensed venders. It used its facilities 
to establish new depots for the sale where none were known 



SALT AND OPIUM MONOPOLIES. 315 

before. The price is low -, the sale immense ; the spread of 
drunkenness is going on over the whole land; and petitions for 
a prohibitory law come to England from the most public-spirited 
of the natives. (2) The Hindoo lives very largely on rice and 
fish, consequently needs a considerable amount of salt, — far 
more than those who live on wheat and flesh. Instead of a light 
tax imposed by previous rulers, the E. I. Company established 
a monopoly of the manufacture by which the price was raised to 
famine rates, and it needed three months' work of a ryot in the 
interior to provide salt for a small family, while fish were carried 
inland half-salted or unsalted, and used in a state of half- 
putrefaction. Fortunately the English salt-makers could not be 
excluded from the Indian market, and their importations forced 
down the price, while it diminished the demand for labor. 
" Imagine," says Mr. Ludlow, '^ the possibility of Cheshire salt, 
produced in a damp and comparatively cold climate like ours, 
under all the disadvantages of rent and royalty, rates and taxes, 
interest on capital and a high price of labor — after being carried 
bulky as it is, to the other end of the world — being sold to one 
of the poorest populations of the world cheaper than that manu- 
factured on their own coasts, where evaporation takes place with 
extraordinary rapidity; where labor is at two pence a day; by 
a government which pays neither rent nor royalty, rates nor 
taxes l" Yet even since this alleviation, salt sold (1855) for 14 
times its cost at Madras, and £72 a ton wholesale in the interior; 
and the average consumption was one-third as much per head 
of the people as the company supplied to its Sepoys. And in 
many ways the monopoly checks industry, restricts the fisheries, 
and hinders the keeping of cattle. (3) The monopoly of opium 
of Bengal began in 1795, the object being to supply the article 
to the armed smugglers who introduce it into China in spite 
of the efforts of the government to exclude the pestiferous drug. 

See The Opium Trade, ns carried on in India and China, by Dr. Nathan 
Allen. Lowell 1850. 2d Edition, 1853. The attempts of the Chinese 
government to suppress the traflBc was the chief if not the only cause of 
the " Opium War" between England and China in 1840-1. In a petition 



816 ELEMENTS OF POLITICAL ECONOMY. 

addressed to the English government by the merchants engaged in it, it 
is said, " That the trade in opium had been encouraged and promoted by 
the Ind'an government under the express sanction and authority, latterly 
of the British government and Parliament, and with the full knowledge 
also, as appears from the detailed evidence before the House of Commons 
on the renewal of the charter" of the E. I. Company in 1833, "that the 
trade was contraband and illegal." When it was proposed in Parliament 
to suppress the monopoly, and thus put an end to the contraband trade, 
a committee reported : " In the present state of the revenue of India it 
does not appear advisable to abandon so important a source of revenue, 
— a duty upon opium being a tax which falls principally upon the foreign 
consumer, and which appears upon the whole less liable to objection 
than any other that could be substituted." The Emperor refused to legal- 
ize what he could not put a stop to, declaring " nothing will induce me to 
derive a revenue from the vice and misery of my people." 

But wherever opium is grown it is used ; and the company's 
servants tell us that " One opium cultivator demoralizes a 
whole village; and that one-half the crimes in the opium dis- 
tricts, — murders, rapes, and affrays, — have their origin in opium- 
eating." The ryot was not allowed to profit much by the crop ; 
before planting the poppies he must make an engagement to sell 
the juice at a specified price, and to the government alone; 
when they were ripening, his fields were examined, the amount 
of the yield estimated, and another engagement to furnish at 
least that quantity was made. If less was furnished, he was 
heavily fined for neglect j if the government advanced him 
money — as was commonly done — to buy seed and get the crop 
in, he paid twelve per cent, interest. Nor had he his choice as 
to whether he would plant the poppies ; he was forced to give 
up a portion of his land to them. (4) Equally oppressive and 
exacting were the methods pursued in carrying on the monopoly 
of tobacco on the Malabar coast. But these are only a few out 
of a multitude of monopolies resorted to in order to avoid taxing 
the importation of British manufactures. The moturpha, one 
of the worst abominations of Moslem finance, was levied upon 
the exercise of every trade and occupation, sometimes in the 
form of a license, sometimes as a tax upon the tools employed, 
often at six times their cost. A tax was laid on every cocoanut 



Belgium's industrial record. 317 

tree ; on the knife with which the tree was tapped for its 
sacchariDe juice ; on the pot in which the juice was boiled. 
The fisherman paid a tux for the very stone on which he beat 
his clothes. A petition sent to England by the natives of 
Madras complains of the practice of annually " leasing out to 
individuals certain privileges, such as the right of measuring 
grain and other articles ; the right to the sweepings of the gold- 
smiths' shops; the right of dyeing betelnut; of cutting wood 
in the jungle ; of grazing cattle ; of gathering fruit and wild 
honey; of catching wild-fowl ; of cutting grass for thatch, and 
rushes for baskets ; of gathering cow-dung, and innumerable 
other such rights of levying taxes on the poorest of the poor." 
In Malabar the company claimed all the wax made by the bees, 
leaving only the honey to the keepers; and actually destroyed 
several branches of industry by exacting a license for their 
exercise. 

§ 284. The progressive peoples are in every case those who 
have fostered and protected national industry by national legisla- 
tion. 

(1) Belgium, "that old cockpit of Europe," is inhabited by 
two peoples, " who speak different tongues, intermingle but 
little, are jealous of each other, and inhabit different halves of 
the kingdom. The one occupying the northern half of the 
kingdom," the Flanders provinces, "where Flemish is spoken, "is 
now famous for its husbandry alone, though once as famous for 
its manufactures." Its linens, woollens, and other fabrics held 
the markets of the world until the seventeenth century, when 
the protective policy of England and France fully acclimatized 
these manufactures on their own soils. Its superior skill in linen 
weaving enabled it to retain a large measure of that industry, 
until the invention of spinning and weaving machines superse- 
ded the spinning-wheel and the liand-loom. Its deficiency of 
coal, and the prohibition upon the export of linen machinery 
from the British Islands, kept up till 1842, forbade competition 
with the power-loom, and the country was reduced to a number 
of small local industries." Fur till 1844 Belgium was a Free 



318 ELEMENTS OF POLITICAL ECONOMY. 

Trade country. Under the imperial rule of Napoleon she shared 
in an unusual degree in the impulse that the continental sys- 
tem imparted to the manufacturers of the Continent. Her 
cottons and woollens were noted for their excellency, and com- 
manded the French markets. But the cheaper price of the in- 
ferior goods with which England flooded the Continent on the 
return of peace inflicted great injury upon both manufactures, 
especially that of cottons. Being transferred from Spain to 
Holland by the Treaty of Vienna, Belgium had free access to 
the markete of the latter and its colonies. But the Kevolution 
which gave her independence in 1830 closed both these against 
her. The new government, taking its cue from the English 
Whigs, who had given it moral support, announced the purpose 
that Belgium should be an agricultural country, contented with 
" the commerce of commission and transit " as a port of entry 
for English goods on their way to the Continent. The Liberal 
party upheld this course, but some of the clerical party, notably 
the Abbe Defoer, contended for protection to home industry. 
They pointed to the increasing prostration of manufactures ; to 
the repeated failures of new enterprise through their exposure 
to unfair competion, English goods selling at one-fourth less 
than the London price, as long as any one attempted to make 
them in Belgium, and French agents acting for years together 
under general orders to undersell the native manufticturers. 
They showed that although coal and iron had been found in 
close proximity in the southern (Walloon, or French speaking) 
provinces, yet no general success had attended the attempts to 
develop this and the other vast resources of the country. 
Associations and companies had been formed ; there had been a 
sort of mania for industrial associations, but they came to 
nothing. At last a government inquiry into the state of Bel- 
gian commerce and industry was ordered, and in 1842 it re- 
ported ; in 1844 the first Belgian protective tariff was adopted, 
and Holland followed the example in 1845 ; in 1846 a commer- 
cial treaty on the basis of reciprocity was effected between 
the two countries, in order that this new tariff might in no 



THE BELGIAN TARIFF AND ITS EFFECTS. 319 

way interfere with their old commercial relations. The 
results are known to all the world in the rapid and vast de- 
velopment of manufactures in the Walloon provinces, which 
now compete with the English in the British markets and those 
of the world. Even in the north " steam factories are now 
rising in Flanders — the excellence of its flax, and the industry 
and manipulative skill of its numerous rural population, may go 
far, as regards the manufacture of linen, to compensate for the 
total absence of iron and coal." Two Englishmen, selected by 
the iron masters to ascertain the reasons of this, made inquiries 
on the Continent, and report that, " with the advantage of pos- 
sessing the best and most skilled workmen in the world, Belgium 
and France have been thrusting us out of foreign markets to an 
extent which the public will hardly credit, and of which the 
trade itself is hardly aware. '^ .... For instance, in Spain, 
" England is thrust aside, defeated by Belgium and France. 
We cannot compete with their producers either in price or in con- 
tinuousness and certainty of supply. Nor is this all. Even at 
home these industrious and pushing people are challenging our 
supremacy, and that not infrequently with success. In bar 
iron, in rails, in engines for agricultural purposes, and even 
in locomotives for railways, they have lately been obtaining 
orders in our own market.'^ 

It is easy to believe that this is rather an overstatement of 
the case, but it has truth enough to be unpleasant reading in 
Birmingham. Upon it they base a plea that English workmen 
should be contented with lower wages, in order that their em- 
ployers may compete with the cheaper labor of the Continent. 
But the development of manufactures in Southern Belgium has 
caused a n;reat advance in the rate of wages, and by furnishing 
the farmer with a near and steady market, has made him fully 
able to pay these. Protection has also naturalized in those pro- 
vinces new species of tillage, such as the culture of beets for 
sugar, from which the bulk of the sugar now used in Belgium 
is derived. " The Walloon farm laborer earns two francs a day, 
and often more, while the Fleming earns but one." " The line 



320 ELEMENTS OF TOLITICAL ECONOMY. 

of division between high and low wages closely corresponds with 
the line of division between the two races ;'' it is also like the 
same line in England, the line of division between the purely 
agricultural and the manufacturing districts. Liege lies on the 
line; three miles south of it farm wages are twice as high as 
they are three miles north of it. The northern provinces, in 
spite of the unequalled agriculture, which has turned Flanders 
into a garden, are afflicted with pauperism. When hand-loom 
weaving ceased it was at its height ; in 1848 there were nearly 
200,000 " indigents," one-fourth of whom were women who 
had lived by spinning. The blow fell heavily on the farming 
class also, as the small holders lost the employment by which 
they eked out a living, and lost the home market for their 
flax. But even Flanders is rallying under the shelter of the 
protection that might have saved her workmen from beggary in 
the process of adopting better methods of manufacture. 

" If any one," says a Belgian Free Trader, " had left the 
country in 1835, after having visited our principal manufactu- 
ring centres, and were to come back to it now," in 1861, " he 
would be struck with the transformation that they have under- 
gone, the advances they have achieved ; he would find a nume- 
rous, intelligent and active population of working people, where, 
a quarter of a century ago, he would have seen nothing but 
country houses scattered at wide intervals over extensive plains.. 
As a consequence, production, except of articles of food, has 
outrun the needs of the population, although it has increased in 
numbers and in wealth, and we are obliged to seek for foreign 
outlets." 

See J. F, Constant : Du Regime Proteeteur en Economie Politique, 
Bruxelles, 1842. H. F. Matthysens : La Hollande, V Angleterre, et la 
Belgique ; Anvers 1850. De Laveleye ; L' Economie Hurale de Belgiqne 
(largely reproduced in Cliffe Leslie's Land Systems and Induatrinl Eco- 
nomy.) Ejusdem : "The Land Systems of Belgium and Holland" in 
Cohden Club Exsays on Systems of Land Tenure; London 1870. H. H. 
Creed and W. Williams, Jr. : Handicraftsmen and Capitalists; London. 

§ 285. (2). Germany is now taking her place among the 
great industrial nations, through the removal of all restrictions 



FREDERICK IN THE ROLE OF COLBERT. 321 

upon internal commerce and the legislative fostering of home 
industry. The second king of Prussia, gruff old Frederick Wil- 
helm, and his son, the great Frederick, began the work of raising 
the land to the place to which its vast resources, its intellectual vigor 
and its past history entitle it. " Frederick," says his greatest 
biographer, " was the reverse of orthodox in ' Political Economy'; 
he had not faith in free trade, but the reverse ; nor had ever 
heard of those ultimate evangels, unlimited competition, fair start 
and perfervid race by all the world (towards ' Cheap-and- 
Nasty,' as the likeliest winning-post for all the world), which 
have since been vouchsafed to us. Probably in the world there 
never was less of a free trader. . . . The desperate notion of 
giving up government altogether, as a relief from human block- 
headism in your governors, and their want of even a wish to be 
just or wise, had not entered into the thoughts of Frederick. 
. . . Many of Frederick's restrictive notions, as that of watch- 
ing with such anxiety that ' money ' (gold or silver coin) be not 
carried out of the country, will be found mistakes, not in orthodox 
Dismal Science as now taught, but in the nature of things ; and 
indeed the Dismal Science will generally excommunicate them 
in a lump, too heedless that fact has conspicuously vindicated the 
general sum-total of them, and declared it to be much truer than 
it seems to the Dismal Science. Dismal Science (if that were 
important to me) takes insufl5cient heed, and does not discrim- 
inate between times past and times present, times here and 
times there/' 

" In improving the industries and husbandries among his 
people, his success, though less noised of in foreign parts, was to 
the near observer still more remarkable. A perennial business 
with him this, which even in time of war he never neglected, 
and which springs out like a stemmed flood whenever peace 
leaves him free for it. His labors by all methods to awaken new 
branches of industry, to cherish and further the old, are incessant, 
manifold, unwearied, and will surprise the uninstructcd reader 
who comes to study them. . . . Certain it is. King Frederick's 
success in National Husbandry was very great. The details of 
21 



322 ELEMENTS OF POLITICAL ECONOMY. 

the very many new manufactures, new successful ever-spreading 
enterprises, fostered into existence by Frederick ; his canal- 
makings, road-makings, bog-drainings, colonizings and unwearied 
endeavorings, will require a technical philosopher one day, and 
will well reward such study and trouble of recording in a human 
manner, but must lie massed up here in mere outline on the 
present occasion/' Excepting some small mention of two Prus- 
sian chemists, that are busied, with aid and comfort from this 
protectionist king, in getting sugar out of beet-juice — Herr Mar- 
graff, 1747 till 1773, and after him a French Monsieur Achard. 
refugee for his religion. This latter finds a second partner in 
Napoleon, with notable results for France (§ 257). 

See Carlyle's Frederick the Great, Book XVI., Chapter VIII. Also 
Book XXI., Chapter II., where the younger and greater Mirabeau's 
MonarcMe Prussienne (Paris 1788), a free trade pamphlet in eight octavo 
volumes, is noticed with the summing up : " M. le Comte, would there 
have been in Prussia, for example, any trade at all, any nation at all, 
had it always been left ' free ' ? There would have been mere sand and 
quagmire, and a community of wolves and bisons, M. le Comte." 

In Mr. Carlyle's earlier works he accepts the results of the Dismal 
Science — as he was the first to nickname Political Economy — as a 
"Divine Message," though "perhaps as small a message as ever there 
was such noise made about before," (Latter Day Pamphlets, 1850). He 
seems to have now got beyond that, converted by the evidence of facts. 

§ 286. Frederick's unfriend, the Empress Maria Theresa, and 
her son and successor, Joseph II., labored much the same way 
for the promotion of industry in Austria. They all made the 
mistake of leaving domestic industry under manifold restrictions, 
which went far to balance the protection against foreign inva- 
sions. The practice of trade was confined to limited corpora- 
tions ; heavy excise duties and monopolies kept back home pro- 
duction ; instead of one national Prussian tarifi" there were sixty- 
seven, for every boundary line that divided province from prov- 
ince was a line of customs' duties, shutting out the home manu- 
facturer from his rightful market. Equally unwise, but quite in 
keeping with this, was the prohibition of the importation of 
certain manufactured goods, and of the export of raw materials. 
The numerous privileged classes were exempt from the action of 



FROM BAD TO WORSE. 323 

these laws, and could bring in what they pleased. Smuggling 
was made a science, and supported by public opinion ; of the 
great mass of officials required by the system, very few were 
above taking bribes. These mischiefs came to a head under 
Frederick's worthless successors, who intensified all the faults 
and neglected all the good points of his system. Adam Smith's 
doctrines were becoming popular in Germany ; Kraus of Koenigs- 
berg and others taught them from professional chairs. A new 
generation of officials grew up under this teaching, who detested 
their country's meddlesome and vexatious fiscal policy for its 
faults, without understanding its merits. 

At last free trade became a recognised maxim of Prussian 
policy. The king proclaimed, during the struggle with Napoleon, 
that all prohibitions were cancelled, and all duties were reduced to 
8i per cent, in the provinces not in possession of the enemy, and 
when the " War of Liberation " broke out in 1813, the proclama- 
tion was renewed. In the meantime the Continental system had 
been extended to Germany ; British and Colonial goods were ex- 
cluded from her markets, while those of France came thither 
free of duty " by right of conquest," without any grant of reci- 
procity. " German industry made admirable progress during 
that time, not only in the different manufacturing branches, but 
in all branches of agriculture, though laboring under all the dis- 
advantages of the wars and of French despotic measures. All 
kinds of produce were in demand, and bore high prices ; and 
wages, rent, interest of capital, prices of land, of all sorts of 
property, were enhanced" (List). The lower Rhine, as hav- 
ing been longest under the French rule, made the greatest 
advance. Perhaps Saxony, hitherto a free trade country, and 
the great depot for the dispersion of British goods over Central 
Europe, came next in point of industrial progress. Germany en- 
joyed prosperity without example at the very time when her 
people were drinking the bitter cup of national humiliation. 
The victories that restored the ir^dependence of European 
nationalities brought disaster to theii: material interests ; it threw 
open their markets to the competition of their insular ally, and 



324 ELEMENTS OF POLITICAL ECONOMY. 

set up all the old Hoes of deoiarcation that divided Germany 
into a few large states and a host of micioscopic despotisms. 
Twenty-seven of these custom-house lines — one-third of the 
whole number — lay across the Rhine, and at each of them com- 
merce was impeded with duties and delays. The German mer- 
chant had no field of activity outside his own little principality ; 
Germany enjoyed protection in each of its members from all the 
rest, and at the same time virtual free trade with the foreigner. 
The cry of ruined merchants and unemployed workmen led 
Prussia to undertake an elaborate investigation of her own indus- 
trial needs. The ministry of Hardenberg and Van Biilow had 
proposed to keep up the present low tariff, but make it specific 
in the nature of the duties imposed, and to abolish all provincial 
restrictions on commerce. The matter was referred to the 
Council of State, who recommended the appointment of a spe- 
cial commission of inquiry, and the king selected one under the 
presidency of Wilhelm von Humboldt. After a prolonged in- 
vestigation, in which all interests had a hearing, the commission 
decided in favor of a moderately protective system, with the 
removal of all prohibitions on exportation or importation, and 
of all local restrictions upon trade. There were only two dis- 
senting voices — both disciples of Adam Smith — in the commis- 
sion; only three in the Council of State; the results were em- 
bodied in the Prussian tarifi" of 1818. 

As if with a view of illustrating both sides of the case at once, Prussia 
in 1822 demanded reciprocity with England in the matter of the Naviga- 
tion laws, and in 1824 Mr. Huskisson granted it. " The effect of reci- 
procity upon the Prussian mercantile navy," says an ardent free trader, 
" has been to diminish it most materially in amount, while British ship- 
ping gains an ever-increasing share in her carrying trade. This case is 
quite sufficient to show what would inevitably be the result of a fair and 
free competition between British shipping and the shipping of any other 
country (in this hemisphere at least), with which it comes in contact," 
(W. P. Adam : The Policy of Retaliation-, London, 1852). The Prussian 
shipping fell ofif 44per cent, in the number of vessels and 27 per cent, in 
their tonnage between 1806 and 1839, although the commerce of the 
country increased vastly. See Porter's Progress of the English Nation, 
p. 396. 



THE ZOLLVEREIN. 325 

§ 287. At the same time a movement in favor of protection 
to German industry and the removal of all custom-houses to the 
German frontier was going on in the centre and south of Germany. 
Friedrich List, then a professor in the University of Tuebin- 
gen, was put forward as its spokesman. It aimed at a national 
tariff system for all Germany, and in 1820 succeeded in securing 
a preliminary treaty at a conference of German ministers at 
Vienna, and then a special conference at Darmstadt. Then fol- 
lowed the establishment of three Zollvereins, — one for North- 
western and Central Germany, headed by Saxony, Brunswick 
and Hanover, with low revenue tariff; one for Southern Ger- 
many, including Bavaria, Wurtemberg, and some minor states; 
a third in the North, consisting of Prussia and the minor states 
in her immediate neighborhood (Ilesse, Nassau, &c.), who adopt- 
ed the tariff of 1818. At last, in 1833, the last two and those 
of the first that lay in Central Germany united on the basis of 
that tariff, including in this great Zollverein about twenty-six 
millions of the German people. Austria on the south, and 
Hanover, Brunswick, Oldenburg, Mecklenburg and the Free 
Cities on the north, alone stood out. Hanover, Brunswick and 
Oldenburg, under English influence, formed in 1828 a Steuer- 
verein with a tariff of low duties for revenue ; as they shut out 
the Zollverein from the North Sea, the latter attempted a union 
with them in 1841, but found that it could only be secured at 
the sacrifice of protection to native industry. In 1853 the an- 
nexation was secured, on condition that Hanover should receive 
seventy-five per cent, more than the share of the revenue to 
which her population would otherwise entitle her. From 1849 
Austria strove to either break up the Zollverein or get admission 
to it with all her dependencies. Many of the minor states favored 
this latter proposal, and it seemed likely that Prussia, in resist- 
ing it, would bring on war. But in 1853 a reciprocity treaty 
between the two powers put an end to the struggle. 

Zollverein means Customs' Union; »S'fe«errerer?j, Imposts' Union. The 
latter was an imitation of the former, without its protective purpose. 

In the Zollverein each state has an equal vote, although 



326 ELEMENTS OF POLITICAL ECONOMY. 

Prussia had till 1852 more than half the populatioa. Another 
sacrifice made by Prussia for the general interest was in the 
distribution of the customs' receipts on the basis of population ; 
small states with a farming population, got far more than their 
true share ; Prussia ^ot half a million thalers a year less, 
and asked no more, although Frankfort-on-Main in joining the 
Zollverein in 1835 received a larger share than her population 
would justify. The duties are assessed on the basis of the ta- 
rijQf of 1818, subject to modification at the conference of repre- 
sentatives. These modifications are of a sort to show the Pro- 
tectionist purpose of that tariff, and of the Zollverein itself. 
Thus in 1843-5, the duty on cotton goods fixed in 1818 at 12^ per 
cent., was very decidedly increased to meet English competition ; 
in 1844 the duties on iron were increased for the same reason. 
The duties on all importations are estimated to average 12 per 
cent., but as a great part of these are low duties on the raw ma- 
terials of manufacture, the duties on manufactured goods must 
be sufficiently high. Dr. Bowring, who was sent out by the 
British Government to examine and report upon the Zollverein 
in 1841, clearly showed the Protective character of the tariff. 
Professor List estimated the duties on manufactured articles in 
common use at from 20 to 60 per cent. " The most popular ob- 
ject of this great social movement is, by a prudent and well 
constructed tariff of duties, to protect and encourage German 
manufactures, to exclude by duties the foreign producer from 
the German market [?], and to extend the exportation of the 
products of their own industry to foreign markets" (S. Laing). 
One of the best and most protective features of the system is 
its imposition of specific duties, changed in their amount ac- 
cording to a periodical observation of the market prices. No 
room was left for false invoices ; none for the foreign exporter 
to throw foreign goods on the market at a merely nominal 
price, after paying merely nominal duties, so as to undersell the 
German maker at a small sacrifice. At the same time the 
duties fell more heavily upon the cheaper and more 
commonly used articles, whose production at home is of the 



THE EFFECT OF THE ZOLLVEREIN. 327 

first importance, and though requiring less of skill in the work- 
ingman, gradually educates him in the skill and taste neces- 
sary for the production of finer wares. 

§ 288. The carefully prepared statistics of the business of the 
Zoilverein, in home production and consumption as well as im- 
portation, give us the data for estimating the efi'ects of the sys- 
tem. We find (1) That protection has vastly increased the 
power of the German people to command the services of other 
peoples. The importations have risen steadily in amount and 
quality, instead of decreasing. " If we look at its practical ef- 
fects upon British industry, we are warranted in the conclusion 
that the wealthier and more industrious our neighbors become, 
the better customers they are in the world's markets, in supply- 
ing which British industry and capital are embarked" (Laing.") 

(2) The wages of labor have been very largely raised, for both 
farm hands and factory hands. Not only has more money been 
paid for a day's work, but so much more as enables the working- 
men to command a much larger amount of material comfort. 

(3) The farmer has not lost what the manufacturer has gained, 
but has gained equally with him ; the prices of raw materials 
and of manufactured goods have steadily approximated, as the 
market has been brought nearer the farm. (4.) The total con- 
sumption of articles of prime necessity has increased in a ratio 
that far exceeds the growth of the population. (5) The enormous 
diflference between rich and poor has been diminished and the 
middle class of prosperous and intelligent people has gained 
greatly in number. (6) The development of home industry 
has not been effected at the expense of that unhappy victim of 
tarifi" legislation, '' the consumer." Even the small class of 
consumers, who are not also — directly or indirectly — producers, 
find their profit in it. As Dr. Bowring shows, the home mar- 
ket is supplied with better and cheaper goods than England 
could furnish, and Prussia is now competing for the possession 
of even the English markets. 

" The Zoilverein, according to the census of 1867, comprises a territory 
of more than 90,000 geographical square miles, with a population computed 



328 ELEMENTS OF POLITICAL ECONOMY. 

at over thirty-eight millions. Since the realization of commercial freedom" 
between the parts of the empire, " German industry has increased in an un- 
precedented degree, and, to a certain extent, competes successfully with 
that of Great Britain. The character of the foreign commerce of Germany 
has entirely changed. Instead of exporting raw materials only, she sends 
out the products of her own manufacturing industry, creating a market 
abroad which keeps her actively employed at home. The German wool- 
len manufacture has recovered the ground lost in the middle ages, and 
its fabrics at present form the chief part of the Zollverein exports. The 
manufacture of cotton and silk has made equal progress, although the 
materials have to be imported. The linen trade has not yet began to 
compete with that of England, but in steel and iron goods, in glass, 
paper and silk manufactures, in pottery, stoneware and porcelain, in 
chemicals, in the refining of sugar and beer, Germany abundantly sup- 
plii ' a wants, and yet reserves a surplus for foreign interchange " 
(Tei;i.es -. i.i,ecent and Existing Commerce — Free Trader). The linen trade, 
also, has become of importance, in later years. 

(7) The Grerman people, once dissevered by the frontiers of 
petty principalities, have been mightily drawn into national and 
political unity by the industrial policy that recognised the iden- 
tity of the material interests of these severed parts. It was the 
Zollverein that made the ideal of German unity popular, though 
it did not originate it. It was the public sentiment thus created 
that enabled Prussia in 1866 and 1870 to put herself at the 
head of a united Germany, and reduce- the petty sovereigns of 
the country to the rank of a landed aristocracy. It was, as 
Mr. Laing points out, the same growth of public sentiment in 
power and control over the government, that compelled Prussia 
to replace her autocratic institutions by a representative system, 
in which the popular will finds a free and regular expression. 
Since that time, Dr. Bowring tells us in 1840 '* the sentiment of 
German unity has been brought out of the regions of hope and 
fancy into those of the positive and material interests." " Ger- 
many in the course of ten years," says List in 1841, " has ad- 
vanced a century in prosperity and industry, in national self- 
respect and power." " The German people," says Mr. S. Laing 
in 1842, " are for the first time united in one great object of ma- 
terial interest; . . . and for the first time they have made the 
influence of public opinion an efi'ective state power in their in- 



THE ZOLLVEREIN AND THE UNITY OF GERMANY. 329 

ternal affairs. . . . The German commercial league is, in its re- 
sult, the most important and interesting event of this half cen- 
tury." " Their exaggerated expectations are that Germany is 
to run the same career as England; to attain the same national 
wealth ; to force or persuade Holland, Belgium, Hanover, Ham- 
burg, Denmark, to become members of the league; to exclude 
all but their own goods and manufactures from the Continent; 
to become an acknowledged political power; to have a common 
flag, common revenues; to have fleets, armies, colonies, and to 
be a great naval power on the ocean." " xlccording to every 
true German, the league is to be the grand restorer of nationality 
to Germany, of national character, of national m'nd, '^ational 
greatness, national everything to a new, regenei.... i ..erman 
nation. They are to spin and weave themselves into national 
spirit, patriotism, and united effort as a great people." 

In 1864 Prussia, following the example of France, reduced her 
tariff from a protectionist to a revenue basis. The competition 
thus challenged proved most disastrous to many of the great in- 
dustries which had been developed by the earlier protective policy 
of the Zollverein. In 1879, after making full proof of what free 
trade could do for Germany, the protective policy was restored again. 

§ 289. (3) Russia became a European power in the time of 
Peter the Great. He and some of his successors — notably 
Catharine II. — labored to foster industry by their patronage, 
but as the people were too unskilful, it was largely by the im- 
portation of foreign artisans. The merchants being mostly Old 
Believers (or Easkolniks) did their utmost to keep foreign manu- 
factures out of holy Russia, but large quantities were brought 
in, especially from the Leipsic fairs. The peace of Tilsit in- 
cluded Russia in the Continental System, until the war broke out 
again in 1812. At the return of peace and the restoration of 
ordinary relations with Western Europe, Russia had an extra- 
ordinary season of prosperity. The failure of the crops in the 
West made a great demand for her grain, and money flowed into 
the country. Under the influence of Storch, a Russian disciple 
of Adam Smith, the Emperor Alexander adopted the free trade 



330 ELEMENTS OF POLITICAL ECONOMY. 

policy. The ruin of a great part of the Russian manufactures 
speedily followed. " It is only the first shock of free competi- 
tion/' said the theorists ; " wait a little and you will see the tide 
turn." But the tide did not turn ; England shut out Russian 
corn to protect her own farmers, and the ruin grew worse. Count 
Nesselrode came to the conclusion that Russia must keep her- 
self. In a ministerial circular of 1821, he says: "Russia sees 
herself compelled by circumstances to adopt an independent in- 
dustrial system ; the products of the empire find no access to 
foreign markets ; domestic manufactures are either ruined or 
on the point of ruin ; all the moneys of the empire flow abroad ; 
and the most solid business houses are on the brink of fail- 
ure." The tariffs of 1820 and 1822 put an end to this period 
of dependence, when, as Mr. Cobden told his countrymen, a ces- 
sation of English exports would have the effect "■ to doom a por- 
tion of her " Russia's " people to absolute nakedness." Since 
that date every year has seen great industrial advances. " In no 
country in Europe has the march of civilization and progress 
in modern times been more rapid, decided and systematic ;" all 
this " having been effected by the energy and wisdom of a few 
master minds." " The manufacturing industry is not yet fifty 
years old. It required nursing under a system of protection, 
but is now so far developed as to admit a great deal of competi- 
tion " (Barry's Russia in 1870). 

The cotton manufacture doubled in a few years after the 
tariff; its products are now worth $125,000,000. At first it im- 
ported four-fifths of the thread used ; but since England re- 
moved her prohibition on the export of spinning-machinery, the 
proportion has changed, and only one-sixteenth of the yarn used 
is imported. The amount is seven times what it was in 1822, 
and employs 175,000 people. Native cottons have driven the im- 
ported out of the great Russian fairs, and the export is much 
greater than the import. They are " capital in quality and neat 
in design ; far prettier and neater, I think, than our own " 
(Barry). Since 1830 the silk manufacture has been protected, 
ind two-thirds of the silks used are now made at home, and 



RUSSIAN MANUFACTURES AS THEY ARE. 331 

3ompete in excellence with any foreign goods, while, like all 
home-made Russian fabrics, they are much better adapted to 
the popular taste. . . There are also ^00 woollen factories, em- 
ploying 110,000 workmen and making goods of the value of 
$50,000,000 annually. The absence of large capital, the lack 
of popular education, the low grade of intelligence, the large 
use — as in Germany — of fabrics spun and woven in the house- 
holds, all tend to keep back Russian manufactures; the Russian 
workman does as he is bid, or as he sees others do, but cannot 
be left with any range of responsibility. But the people are 
making large advances, especially since the emancipation of the 
serfs, and in the absence of other teachers, the discipline and 
the work of the factory is of itself sharpening their faculties and 
quickening their perceptive powers. The somewhat lower tariff 
of 1869 imposes duties of at least thirty-five per cent, on foreign 
manufactures. " Everything is now done to stimulate trade ; 
every inducement held out to encourage manufactures ; factories 
are springing up fitted with native-made machinery. Branches of 
industry are started, which before were thought to be impossible 
for Russian ingenuity to master, and trade flourishes as it never 
flourished before. Ever since the Crimean war the amount of 
interchange of commodities has been increasing" (Barry). 

§ 290. Sweden began to develop her manufactures by protec- 
tion in the time of the great Gustavus Adolphus. During the 
later Middle Ages the country was kept in a state of poverty 
through the oppressions of the Hanseatic League and the back- 
wardness of its people. Even after its emancipation from the 
Danish rule it formed no higher ambition than to export raw 
materials in exchange for the small quantity of manufactured 
goods this commerce could afi'ord her people. Gustavus formed 
and executed the purpose to make his kingdom a manufiicturing 
country. His protective policy has been maintained from that 
day to this, with great results to the kingdom. The first and 
only departure from it was in 1845. Sweden was almost the only 
country that responded to the proposal — reciprocity as to naviga- 
tion laws — made by England. English authority describes her 



332 ELEMENTS OF POLITICAL ECONOMY. 



^ 



present tariflF on goods as '' having the unfortunate distinction 
of disputing with Spain the debatable honor of being the high- 
est in the world, the Russian only excepted." Till 1824 the 
prohibition policy was followed, under •' a more liberal but tho- 
roughly protective {t7'es-protecteur) system," her manufactures 
were more than trebled in thirty years, and her agriculture so 
much improved that she now has large quantities of grain for 
export, instead of depending, as was once the case, upon the 
granaries of Finland. 

La SuMe et son Commerce, par le Baron Knut Bonde ; Paris, 1852. 

(5) Denmark is and was a protectionist country. " She 
stands alone in her corner of the world, exchanging her loaf of 
bread, which she can spare, for articles she cannot provide for 
herself, but still providing for herself everything she can by her 
own industry. . . . This home industry of hers is protected by 
heavy import duties on all foreign articles which could compete 
with her own manufactures; and these are avowedly imposed, 
not for revenue, while a lower duty would be more productive, 
but for protection. . . . The object is simply to secure a living 
to that portion of the population which is not engaged in hus- 
bandry, and which, without protective duties on all that inter- 
feres with their branches of industry, would become a burden 
on the rest of the community." 

See S. Laing's Denmark and the Duchies ; London, 1852. 

§ 291. (6) Spain was one of the first to adopt the prohibitory 
system, and that by which revenue was raised by duties on the 
commerce between the dififerent provinces of the kingdom ; she 
was also one of the last to give these up. The system was often 
as ruinous to home industry as it was meddlesome ; thus in 1720 
she adopted a tariff which was ingeniously mischievous. " Its 
provisions discriminated against the export of Spanish goods to 
the colonies, and in favor of foreign manufactures and of con- 
traband trade. The industry of the nation, arrested first of all 
by the competition of Italy and the Low Countries, afterwards 
by that of England and France, ceased its development. It re- 
mained backward it was paralyzed, while the other countries by 



SPANISH TARIFFS. 333 

means of Cadiz carried on the commerce of its colonial pos- 
sessions, and drew from them the raw materials and the precious 
metals which they produced. The tariff of 1778 which im- 
posed heavy duties upon goods produced abroad came too late; 
the miechief was accomplished, and the industry of Spain was 
all but annihilated " (J. F. Constant). It had no time to rally 
before the Napoleonic wars completed her misery. She has 
suffered more this century than any other country from internal 
discord and civil war. The country is rich in the elements of 
material wealth, but poor in population, being next to Scandinavia 
and Russia in the sparseness of population. The first really 
national and simply protective tariff was adopted in 1845 ; it 
abolished all provincial tariffs and most of the prohibitions, and 
reduced the duties on a good many articles without in the least 
giving up the principle of protection. That Spain has advanced 
rapidly in industrial development during the thirty years that 
have elapsed is universally conceded. " Progress," wrote M 
Block in 1850, " is so rapid that the figures of to-day are left 
behind to-morrow. On every side we see factories and workshops 
rising, established either by Spaniards or by foreigners. These 
latter crowd into this country of great expectations, where so 
much land still awaits active and intelligent occupants, who 
bring hither their talents and their capital. '^ 

See L' Espngne en 1850, Tableau de sea Progrea lea plua recenta ; par 
Maurice Block. Paris, 1851. 

The new tariff of 1869 reduced the duties on a great number 
of articles without giving up, either in fact or in intention, the 
principle of protection ; after its adoption the revenue, which 
had fallen off since 186-4, considerably increased. The destruc- 
tion of the French vines by the Phylloxera insect having created 
a great demand for foreign grape-juice to meet the demands on 
the French wine-market, the Spanish vine-growers in 1882 voted 
to sacrifice Spanish manufactures to their French rivals in ex- 
change for concessions which would give them advantages over 
other vine-growing countries. The new commercial treaty caused 
great disturbances, and even riots, in Catalonia. 



334 ELEMENTS OF POLITICAL ECONOMY. 

§ 292. Two European countries enjoy the unhappy distinction 
of illustrating the miseries inflicted upon nations industrially 
weaker when they engage in free competition with those that 
are stronger. 

(1) Portugal m 1681 began the development of her. woollen 
manufactures, the Count de Ericeira being Prime Minister and 
author of this policy. " Our woollen cloths, cloth serges and 
cloth druggetts," says the old British Merchantman, "were 
prohibited" after 1684; "they set up fabrics for making cloth, 
and proceeded with very good success, and we might justly 
apprehend that they would have gone on to erect other fab- 
rics, until at last they had served themselves with every spe- 
cies of woollen goods." The prohibition not extending to all 
woollen fabrics, but only to those most in use, was repeatedly 
evaded by making goods that differed from these only in some 
trifling respect, but bore names invented to suit the Portuguese 
tariff. At last, in 1703, after the death of Ericeira, Portugal 
negotiated the Methuen Treaty with England, by which Portu- 
guese wines were admitted into England at lower rates than 
those of France, and English goods into Portugal at the old 
rates of duty. The aristocracy, who were large wine-growers, 
were chiefly interested in the new arrangement. " Their own 
fabrics," says the British 3Iercha7itman, "were perfectly ruined, 
and we exported £100,000 value in the single article of cloths 
the very year after the treaty. The court was pestered with 
remonstrances from their manufacturers ; . . . . but the thing 
was passed, the treaty was ratified, and all their looms were 
ruined." One of the first effects was such a drain of silver 
from Portugal that " there was left very little for their neces- 
sary occasions," and this was followed by a drain of gold. Ex- 
change stood at fifteen per cent, against Portugal, and her 
export of coin to England rose to £1,500,000 a year. Goods 
were not paid for in goods, as Free Traders allege. 

Her people were reduced to the monotony of a single occupa- 
tion ; the amount of their productive labor was vastly dincin- 
ished; their power of association and mutual helpfulness was 



THE RUIN OF PORTUGAL. 335 

destroyed. The diflference between the price of their raw pro- 
duce and the maDufactured goods for which they exchanged 
them, increased as the workshop was carried away from the 
neighborhood of farm and vineyard. The aristocracy of land- 
owners found that they had been killing the goose that laid the 
golden eggs, for though, as there was no occupation but farming, 
the people were competing for the possession of land, the rents 
that they were able to pay were much less than if a varied in- 
dustry had furnished a home market by withdrawing a large part 
of the people from agriculture. One new industry was created — 
smuggling. " We do not deny," says Mr, Macgregor in his 
Commercial Statistics, " that there were advantages in having a 
market for our woollens in Portugal, especially one of which, if 
not the principal, was the means afforded of sending them after- 
ward, by contraband trade, into Spain/^ As to her legitimate 
commerce, Mr. McCullough says that the tonnage of her ship- 
ping is about one-thirtieth of what it was, and that her produce 
is mostly carried in foreign ships. Every year saw a decline of 
the nation in wealth, civilization, power and prestige. Her peo- 
ple retrograded in intelligence and skill. ^' It is surprising,'* 
says an English traveller, " how ignorant, or, at least, superfi- 
cially acquainted, the Portuguese are with every kind of handi- 
craft; a carpenter is awkward and clumsy, spoiling every work 
he attempts, and the way in which the doors and woodwork, 
even of good houses, are finished, would have suited the rudest 
ages. Their carriages, of all kinds, from the fidalgo's family 
coach to the peasant's market cart, their agricultural imple- 
ments, locks and keys, &c., are ludicrously bad. They seem to 
disdain improvement, and are so infinitely below par, so stri- 
kingly inferior to the rest of Europe, as to form a sort of dis- 
graceful wonder in the middle of the nineteenth century" 
(Bailly). "The finances," says the Annuaire de V Economie 
Politique for 1849, ''are in the most deplorable condition ; the 
treasury is dry, and all branches of the public service suffer. A 
carelessness and a mutual apathy reign throughout the govern- 
ment and the nation." 



336 ELEMENTS OF POLITICAL ECONOMY. 

Nor has England gained as much as Portugal has lost ; the 
country is too poor to be a good customer. The Portuguese de- 
mand for English goods is now of no importance, and has no 
effect on the English market. The country is a sucked orange, 
a thing to be got rid of — " a burden and a curse to England," 
Mr. Cobden says. 

After the defeat of the Church party and its leader Don 
Miguel, a protective tariff was adopted in 1837, and its rate of 
duties increased in 1841. It has the merit of being " specific" 
in its method, so that its rates fall most heavily upon the com- 
moner and cheaper articles. But in a country so demoralized 
by contraband trade, so stripped of all the elements of industrial 
wealth, so bereft of skill and enterprise, it can only operate 
slowly in retrieving the fortunes of Portuguese industry. Still it 
has made a change. It has turned the balance of trade with 
England in Portugal's favor, and already " manufactures of 
woollen and cotton goods, paper and tobacco, employ many per- 
sons in Lisbon, and the printing of cotton goods imported from 
England, has nearly put a stop to the trade in English printed 
goods" (Dr. Yeates). 

§ 293. Turkey, Mr. Cobden thinks, is also *' a burden and a 
curse " to the commercially powerful nation with whom she has 
long enjoyed free trade. Turkey was once a burden to nobody; 
was one of the chief commercial nations of the world. "Greece 
and Asia Minor furnished us with their manufactured products, 
together with those of India, long after their conquest by the 
Turks, and up to the period when the industry of Europe reached 
its development. To-day their manufactures have all but dis- 
appeared, and those unhappy countries have nothing but farm 
products" (Constant). When the power-loom superseded the 
hand-loom in Western Europe, there was an immense importa- 
tion of British goods. The muslins, the ginghams and the 
carpets that for centuries had commanded the markets of the' 
world, that fifty years ago were worn in the backwoods of America, 
were driven out of their own home markets. " Although," says 
McCulloch, " our muslins and chintzes be inferior in fineness to 



THE RUIN OF TURKEY. 337 

those of the East, and our red-dje be inferior in brilliancy, those 
defects are more than balanced by the greater cheapness of our 
goods ; and from Smyrna to Canton, from Madras to Samarcand, 
we are everywhere supplanting the native fabrics." Turkish 
carpets are still unequalled by the Western fabrics, but the 
latter have driven them out of the market. " Of six hundred 
looms for muslins in Scutari in 1812, only forty remained in 
1831 ; and of two thousand weaving establishments in Tournovo, 
there were only two hundred " left. 

Under any financial system, short of enforced prohibition of 
foreign manufactures, these Eastern industries would have had 
a severe struggle, but would most probably have survived it. 
Protection might have been the means of importing foreign 
skill, and perhaps, in spite of English prohibition, the necessary 
machinery. But the Turkish merchants had all the odds against 
them. In the absence of a sufficient revenue from customs' 
duties, and of direct taxation, the native industry of the country 
was severely taxed. Taxes on trades, taxes on tools, taxes on 
every sort of raw material, taxes on every kind of home-made 
fabric, licenses and monopolies, all were laid upon the workman 
at home, while his competitor from abroad paid the merest trifle 
in customs' duties, and, by special treaties with France and Eng- 
land, even that wa^* reduced from five to three per cent, ad 
valorem^ in consideration of the exemption of Turkish vessels 
from certain harbor duties. Native exports pay twelve per cent. 

For a time there was left to Turkey a lifeless trade in raw silk, 
cotton and the like. Now even that is gone to countries less 
burdened with taxation. " Ships carrying goods to Constanti- 
nople either return in ballast, or get cargoes at Smyrna, Odessa, 
&c." Only a few of the ruder manufactures are still carried on ; 
a woman's labor is worth four cents a day; a man's will com- 
mand as much as fifty cents a week in the seaports. 

" The provincial populations, though not devoid of capacity 
for better things, are at present condemned to wither under a 
general atmosphere of maladministration and decay. . . . Beg- 
gars all, beggars all, marry, good sir; little doing, less likely 
22 



338 ELEMENTS OF POLITICAL ECONOMY. 

to be done; trade degenerated into pedlary, enterprise into 
swindling, banking into usury, policy into intrigue, lands un- 
tilled, forests wasted, mineral treasures unexplored, roads, har- 
bors, bridges, every class of public works utterly neglected and 
falling into ruin, pastoral life with nothing of the Abel about 
it, agriculture that Cain himself, and metallurgy that his work- 
man-son might have been ashamed of; in public life, universal 
venality and corruption ; in social life, ignorance and bigotry ; 
and in private life, immorality of every kind ; not ' something,' 
but everything 'rotten in the state of Turkey. Such is the 
picture " drawn by Dr. Lennep. " We may add that it is hardly 
an overdrawn one." 

See for this and the quotations that follow, the article " Provincial 
Turkey," in the London Quarterly Review for October, 1874. 

Yet the fault is not in the country or the people ; for the 
Turks are '^ as a rule industrious, simple, thrifty, ingenious too, 
peaceable and orderly;'' as free from the grosser and worser 
forms of vice and crime as any nation under the sun. " That they 
enjoy a climate than which few are more favorable to labor and 
produce ; that the soil is almost everywhere fertile above, and 
rich in valuable ores below; that the coast abounds in places of 
shelter, and the inland with noble rivers, are facts which no one 
will question. Yet it is no less certain that capital has van- 
ished from the land, that every undertaking, every enterprise, 
is surely smitten with failure ; that the social condition is dete- 
riorating in every respect, the number of the inhabitants dimia 
ishing, and that the symptoms precursive of a general bank- 
ruptcy, not of means and finances only, but of vitality and of 
men, become more menacing year by year, almost day by day." 

And at the bottom of all the mischief lies the impoverishment 
of the people through a bad national economy. ^' Want of 
capital is the head and front of Turkey's ills throughout her 
length and breadth at the present day ; want of men, the ne- 
cessary correlative or result of the former, the second." No- 
thing is left her but agriculture, and such an agriculture ! " All 
up the sides of the green hill " upon which a Turkish governor's 



THE DECAY OF TURKISH INDUSTRIES. 339 

palace is perched, " far over the wide Asiatic plain, we see the 
yet unefFaced traces of irrigation channels, now broken down 
and dry ; while removed from their original places, and strewed 
at random over the ground here and there, lie the boundary 
stones that once marked the limits of fields since abandoned to 
weed and bush. At forty per cent, taxation, and such is the 
very lowest rate levied by the Stamboulee tithe-gatherers on 
the Turkish — if the crop be bad, the percentage may amount to 
something much higher — agriculture is not a paying business; 
and such luxuries as irrigation, drainage, manure, and improve- 
ments of any kind, are out of the question. The landowner, 
impoverished and in debt, cannot make them; the government 
has very different uses for the money it takes from them, and 
will not." 

"Another blight overspreads the land as pestilence follows 
famine. What the tax-gatherer has left is gleaned by the 
usurer. . . There exists even now no credit-system in Turkey, 
no country bank, no means of obtaining an advance except by 
private loans ; no investment except in such loans ; no limit to 
the terms, no security on the payment." With the destruction 
of capital through the paralysis of societary circulation, and the 
drain of money abroad, the destruction of credit has gone on 
pari passu. There are a few banks in the seaport towns, but as 
their transactions are chiefly the negotiation of government 
loans and speculations with foreign or mixed companies, they 
tend " to draw off the wealth of the Empire, not to husband it; 
they are not reservoirs, but drains. The peasant, pressed by the 
claims of the tax-gatherer, the landowner in need of money for 
improvements, the shopkeeper desirous of outfit, the artisan who 
would set up or extend his workshops, are one and all driven 
into the hands of the private lender. . . The unfortunate peasant 
is thus ground as between an upper and a nether millstone. 
Three per cent, a month is the ordinary rate of interest ; and 
this, if unpaid, is at the end of the year added to the principal. 
The day of selling out soon comes ; the family emigrates or 
starves. We have known a single money-lender thus draw to 



340 ELEMENTS OF POLITICAL ECONOMY. 

himself the substance of a whole district. Another evil that 
naturally follows is that capital wherever it exists is certain to 
be applied almost exclusively to loans of this nature, while for 
productive investment scarce a farthing can be found. A profit 
of thirty-six per cent, is sure, particularly with the Asiatics, to 
be preferred to one of four or five per cent, though more solid 
and made by honester means, such as mining, agriculture, and 
the like. Hence, too, every work of public utility is thrown 
into the hands of foreigners ; foreign capitalists construct 
harbors, work mines, utilize forests, lay down railroads, or at 
least organize companies which profess to do all these things; 
while the profits, if any, are shared among foreigners and outside 
the country. . . Lastly, whatever home-made capital still remains 
in the territory is unavoidably, by the very universality of small 
private loans, so broken up and subdivided as to become prac- 
tically useless for any serious purpose. Of all the sinister in- 
fluences at work within the empire, none is more directly 
destructive of its internal prosperity, and, above all, of its agri- 
cultural and landed well-being, than this. ' Not a single 
property, great or small, within this district, but is burdened to 
my certain knowledge with obligations and liabilities exceeding 
the value of its possible produce for two generations to come,' 
said a Turkish provincial governor." 

The outside world is continually deceived by a show and pre- 
tence of reform, but these go no deeper than the surface. Things 
are growing worse, not better. " The administration is more 
corrupt than ever, justice more venal, popular education more 
neglected, taxation much heavier, and the population at large 
more impoverished and dwindling than in any preceding epoch. 
. . . When the mines of Anatolia are worked, the manufactures 
of Syria encouraged, the dikes of the Tigris valley restored; 
when the bridges, roads, quays, embankments, canals, reservoirs, 
caravanseries, all that was the pride and profit of local govern- 
ments, and is now perishing or has perished with them, are re- 
paired and perfected, — then indeed will there be hope for the 
government and the governed, for Turkey and her Sultan." 



OUR COLONIAL HISTORY. 341 

Hand-in-hand with the destruction of local centres of industry, 
with the lowering of the people to the level of a single employ- 
ment, and with the eflfaceuient of the freedom and individuality 
of character that accompany diversified employment, has gone a 
parallel political revolution that closely corresponds to the 
economic one. " From a confederacy of half-independent states, 
each retaining in the main its own customs, privileges and insti- 
tutions, guaranteed by a strength to defend them, and by a 
rough but efficacious popular representation, Turkey has within 
the last fifty years sunk into an absolute, uncontrolled, central- 
ized despotism, under which every former privilege, institution, 
custom, popular representation — in a word, every vestige of 
popular freedom and local autonomy — has been merged and lost 
in one blind centralized uniformity." " She has sacrificed an 
empire to a capital." And the decline of military power has 
followed that of industry. " Whoever lists may now assail the 
provinces with the safe assurance that the regular troops once 
overcome no further opposition will remain ; the people starved, 
disheartened, disarmed, and thoroughly alienated at heart from 
a government that is a mere synonym for fiscal extortion, that 
takes all and gives nothing, that has forgotten the traditions of 
its youth, and preferred the office of tax-collector to that of 
leader, will offer no resistance.'^ 

§294. The history of American industry may be said to begin 
with the independence of the nation, or rather with the adop- 
tion of the present Constitution. The navigation laws confined 
the carrying trade of the colonies to English or colonial vessels. 
In 1672 duties were imposed upon goods carried from one Brit- 
ish colony to another, and as the West Indies at that time sup- 
plied us with sugar, cotton, tobacco and indigo, took timber, 
grain, &c., in exchange, the trade thus taxed for the benefit of 
the English treasury was an extensive one. 

During the last century the tendency of the colonies to unite 
manufactures with their agriculture and save the expense of 
transportation of the raw produce they sold and the manufac- 
tured goods they imported, was sternly repressed by English 



342 ELEMENTS OF POLITICAL ECONOMY. 

legislation. They saw, as Franklin wrote from London in 1771, 
that " every manufacturer in our country makes part of a market 
for provisions within ourselves, and saves so much money to the 
country as must otherwise be exported to pay for the manufac- 
tures he supplies. Here in England it is well known and under- 
stood that wherever a manufacture is established which employs 
a number of hands, it raises the value of land in the neighbor- 
ing country all around. It seems, therefore, the interest of our 
farmers and owners of land to encourage young manufactures in 
preference to foreign ones." 

In 1699 the export of wool and woollens from the colonies, as 
well as from Ireland, was forbidden. In 1731 an inquiry of the 
Board of Trade ascertained that the colonies were making linens, 
woollens, iron-wares, paper, hats and leather, and even export- 
ing hats. The carriage of these, even from one " plantation " or 
colony to another, was forbidden. In 1750 the preparation of 
iron, except in its rudest form for export to England, was pro- 
hibited; and every slitting or rolling mill, tilt-hammer, forge or 
steel furnace was declared " a common nuisance.'^ The making 
of pig iron was allowed, because, the application of coal to its 
manufacture being as yet not invented, and the American woods 
furnishing an unlimited supply of charcoal, it was thought good 
policy to encourage the colonies in this line. The law was very 
commonly evaded, as the ruins of the old steel furnaces and iron 
works in out-of-the-way places of New Jersey and other states 
still show. 

The economical theories which underlay this British policy will be found 
in a standard work of that period — Gee On Trade, (London, 1750). " Our 
colonies," he says, " are much in the same state that Ireland was in when 
they," the Irish, " began the woollen manufactory, and, as their numbers 
increase, will fall upon manufactures for themselves. A little regulation 
would remove all this out of the way, It is proposed that no weaver 
have liberty to set up any looms without first registering the name and 
abode of any journeyman that shall work for him; that all negroes shall 
be prohibited from weaving either linen or woollen, or combing of wool, 
or working at any manufacture of iron, further than making it into pig 
or bar iron ; they shall for time to come never erect the manufacture of 
nails, under the size of a two-shilling nail, horse-nails excepted; that all 



THE REVOLUTION AN INDUSTRIAL REVOLT. 343 

slitting-mills and engines for drawing wire or weaving stockings be put 
down ; that also they be prohibited from manufacturing hats, stockings 
or leather of any kind. ... If we examine into the circumstances of 
the inhabitants of our plantations, and our own, it will appear that not 
one-fourth part of their products redounds to their own profit, for out of 
all that comes here, they only carry back clothing and other accommoda- 
tions for their families, all of which is of the merchandise and manufac- 
ture of this kingdom. . . . All these advantages we receive by the 
plantations, besides the mortgages on the planters' estates, and the high 
interest they pay us, which is very considerable ,• and therefore very great 
care ought to be taken that they are not put under too many difficulties, 
but encouraged to go on cheerfully. . . . The colonies have not commo- 
dities and products enough to send us in return for purchasing their 
necessary clothing, but are under very great difficulties, and therefore any 
ordinary sort sell with them, and when they have grown out of fashion 
with us, they are new-fashioned enough there." 

This is not irony, as we might have supposed if De Foe had written 
it, but sober earnest. It represents the unquestioned English opinion of 
that day. Even our friend Lord Chatham declared in the same spirit 
that the colonies should not be allowed to manufacture " so much as a 
hob-nail " for themselves. 

§ 295. The legislation to keep the colonies to the work of 
producing raw materials for English manufacturers, and take in 
pay a small share of English goods, while through their ne- 
cessities English capital became more and more the master of 
their estates, was among the provocations that led to the American 
war of independence. While the war lasted English goods found 
but scanty access to American markets, and the people were 
forced to make for themselves the articles of prime necessity 
which they had hitherto bought in England. Among the worst 
hardships of the earlier years of the struggle was the absence 
of those native industries that would have made the country in- 
dependent of the foreign market. The return of peace in 1783 
brought ruin upon the home manufactures which the war had 
called into existence. England had an attack of the exportation 
mania. Every one who had hoarded up a few pounds, even the 
maid-servants, invested their savings in a " venture" to the new 
country. The American market was flooded with British wares ; 
they soon sold at far less than the English prices, inflicting se- 
vere loss upon these " adventurers." But the blow fell still more 



344 ELEMENTS OF POLITICAL ECONOMY. 

heavily upoQ the workman at home. " Not a hatter, a boot or 
shoe maker, a saddler, or a brass-founder, could carry on his 
business, except in the coarsest and most ordinary productions 
of their various trades, under the pressure of foreign competi- 
tion. . . The people had gone to war not for names, but for 
things, . . to redress their own grievances, to improve their own 
condition, to throw off the burden of the colonial system. . . . 
The arm which struck for independence in the field was palsied 
in the workshop ; the industry which had been burdened in the 
colonies was crushed in the free states." The Articles of Con- 
federation, adopted during the war, constituted a central govern- 
ment too feeble in its powers to remedy this and other evils. 
Individual states adopted protective tariffs, but these cut the 
confederation into parts separated by custom-house frontiers. 
To remedy this a new and stronger union was demanded, — a 
government constituted directly by " the people of the United 
States,'' and not by a contract between the states, a government 
in whose hands should be placed the power " to promote the 
general welfare " by providing for the industrial development 
of the whole country. The new Constitution went into effect in 
1789. "I conceive, sir," says Fisher Ames, a leading member 
of the Convention that drafted it, ** that the present Constitution 
was dictated by commercial necessity more than by any other 
cause. The want of an efficient government to secure the manu- 
facturing interests, and to advance our commerce, was long seen 
and pointed out." The power to regulate both foreign com- 
merce and that between the states was clearly vested in the 
national government by the new document, and for ever taken 
away from the states. 

§ 296. President Washington was inaugurated in a coat of 
home-spun cloth, and selected for Secretary of the Treasury 
Alexander Hamilton, a young man who had already distinguished 
himself as a man of business, a soldier and a political thinker, 
and was to prove himself perhaps the very greatest of American 
statesmen. He had an enormous task before him ; the country 
was burdened with an unjustly contracted and justly hated debt; 



ALEX. HAMILTON'S PROTECTIVE POLICY. 345 

its credit destroyed, its people all but bankrupt. But his A'igor- 
ous administration of the finances brought back prosperity. 

The first Congress found its table loaded with petitions from 
the business men of all the leading cities of the Union from 
Boston to Charleston ; these portrayed the ruin that had been 
wrought by the competition of the foreign trader, not only upon 
manufactures but upon all the interests of the country, and with 
one voice asked the intervention of the national government for 
its protection. A bill was passed (and signed by the President 
July 4th 1789) imposing " duties on goods, wares and mer- 
chandise imported," this being " necessary," the preamble alleges, 
" for the payment of the debts of the United States and the en- 
couragement and protection of manufactures." These duties 
were very low, — too low to aflFord much protection, even in those 
days when the cost of transport was so great. So we find 
Washington reminding the adjourned session of this Congress 
(Jan. 1790) that " the safety and interest of the people require 
that they should promote such manufactures as tend to render 
them independent of others for essential (particularly for mili- 
tary) supplies." A second and much more protective tariff was 
adopted (August 1790) after Secretary Hamilton had been asked 
to "report a plan, conformably to the recommendation of the 
President, for the encouragement and promotion of manu- 
factures." At the next session, October 1791, Hamilton made 
his famous " Treasury Report " on the subject. It was a masterly 
statement of the new era upon which industry was entering, 
through the use of machinery and the division of labor; of the 
advantages that would be lost to the nation who fell behind in 
this advance ; of the interdependence of all the material interests 
of the country, and of the relation of a diversified industry to 
national prosperity. He stated with candor and refuted with 
force the usual objections to a protective policy. He pointed 
out seventeen branches of manufacture already established, and 
some of them even in a position to export their products. He 
reminded Congress that " when a domestic manufacture has at 



346 ELEMENTS OF POLITICAL ECONOMY. 

tained to perfection, and has engaged in the prosecution of it a 
competent number of persons, it invariably becomes cheaper." 

Strangely enough, the production of raw cotton was one of 
the industries specially protected at this period. South Carolina 
and Georgia were at this time in a state of industrial prostration. 
India had secured their European market for rice and indigo, 
and the price had fallen so low that it was not worth while to 
export them. They were looking around for some other staple, 
such as hemp; one of their representatives in Congress said in 
1789 : " cotton was likewise in contemplation among them, and 
if good seed could be procured he hoped might succeed.'^ Raw 
cotton was taxed 3 cents a pound for their benefit, being 8 or 10 
per cent, of its value, and this was continued in the face of 
Hamilton's protest that it was unwise to put a duty on the raw 
materials of a manufacture. For years every New England 
factory — almost every New England family — paid three cents a 
pound more for West Indian cotton. In 1794 Mr. Jay, in nego- 
tiating a treaty with Great Britain, put cotton into the list of 
articles not to be imported thither in American ships. In 1796 
a Wilmington firm petitioned Congress for a repeal of the duty, 
and was refused because it " would damp the growth of cotton 
in our own country." In 1794 Eli Whitney, a Yankee living in 
Georgia, and observing the costly and clumsy way in which the 
cotton was cleaned from the seeds by hand, invented the cotton- 
gin, which gradually revolutionized the industry and at once put 
the Southern States ahead of all competition. 

The facts are given in detail in Edward Everett's Address lefore the 
American Institute in 1831. 

§ 297. The breaking out of the wars that followed the 
French Revolution furnished a still more effective protection to 
American industry by interrupting the communication with Eu- 
rope — the British Orders in Council (1806) having declared 
the coast of Europe in a state of blockade, and the Berlin and 
Milan Decrees of Napoleon (1806 and 1807) having retorted 
with a similar paper blockade of the British Islands. Ameri- 
can trading vessels had to run the risk of capture by one of 



THE LESSONS OF WAR TIME. 347 

these powers when bound for the dominions of the other. This, 
with England's claim of the right to search American vessels 
for English seamen, led to acts of retaliation on the latter 
power. All British vessels were ordered to leave American 
ports, and an embargo was laid upon American vessels, forbid- 
ding them to sail for England. This was followed by a non-in- 
tercourse law in 1808, renewed in 1809. In 1812 war broke 
out between England and America, and the duties upon all spe- 
cies of foreign merchandise were doubled to meet its expenses, 
the increase to be in force till a year after its close. But in 
spite of the impulse given to native industry by the political 
troubles, it found the United States unprepared. " What did 
we discover," says Dr. Bushnell, •'* in our war of 1812, but that 
we had nothing to equip the war? Having no woollen manu- 
facture, we could not clothe our soldiers ; we could not even 
make a blanket. We had been free traders, buying all such 
things because we could buy them cheaper ; but we now dis- 
covered that we mi^ht better have been making blankets at 
double the cost for the last fifty years. The same was true of 
saltpetre for gunpowder; of guns, and cannons, and swords, 
and iron and steel out of which to make them We be- 
gan, also, to discover that the very insignificant article of salt, 
coming short in the supply, was nearly a dead necessity — one of 
the munitions of war — and that manufacturing it for ourselves 
at double the cost would have been a true advantage. . . . We 
very soon discovered in the facts referred to the lowness of our 
organization, and the very incomplete scope of our industrial 
equipments. Our products were not various enough tor make a 
complete nation." 

The tarifi" legislation up to this war, and, indeed, till 1824, 
had the defect of the tariff of 1790 ; while framed with the 
best intentions, it was, in fact, inadequate. Its authors had as 
yet no conception of the enormous power brought to bear for the 
destruction of our industries and the preservation of the supre- 
macy of British manufactures. It was part of the English pro- 
gramme to keep America in the position of colonial dependence 



348 ELEMENTS OF POLITICAL ECONOMY. 

by these new weapons after the political independence of the 
republic had been acknowledged. A Birmingham manufacturer 
prophesied on the breaking out of the war that the crops of the 
United States would be devoured with vermin, because there 
was not skill enough in America to manufacture a mouse-trap. 
Others put much the same estimates of us into more polished 
forms ; the chief industrial function they saw in the young 
republic was its power to purchase English goods. As Lord 
Lyndhurst said in 1838 : " The United States of America was 
always considered our own especial market.'' " The extent and 
swift, regular progress of the American market for English 
goods," said Henry (afterwards Lord) Brougham in 1813, " we 
can easily account for America is an immense agricul- 
tural country, where land is plentiful and cheap ; men and 
labor, though quickly increasing, are yet still scarce and dear 
when compared with the boundless regions which they occupy 
and cultivate. In such a country manufactures do not natu- 
rally thrive ; every exertion, if matters be left to themselves, 
goes into other channels. This people is connected with 
England by origin, language, manners and institutions; their 
tastes go along with their convenience, and they come to us, as 
a matter of course, for the articles they do not make them- 
selves." After noting that they bought about £16,000,000 a 
year of English cloths, he continues : " But it is not merely in 
clothing. Gro to any house in the Union, from their large and 
wealthy cities to the most solitary cabin or log-house in the 
forests — you find in every corner the furniture, tools and orna- 
ments of Staffordshire, of Warwickshire, and of the northern 
counties of England The whole population of the coun- 
try is made up of customers, who require and wlio can afford to 
pay for our goods." But the Orders in Council had made a 
change. The English system was " forcing manufactures all over 
America to rival our own. There is not one branch of the many 
in which, we used quietly, and without fear of competition, to 
supply them, that is not now, to a certain degree, cultivated by 



"STIFLE THEM IN THE CRADLE.'* 349 

themselves ; many have wholly taken rise since 1807 — all have, 
rapidly sprung up to a formidable maturity." 

§ 298. When the war ended there was a considerable por- 
tion of the people of the United States engaged in manufac- 
tures, and a large amount of capital had been turned in that 
direction, and could not be diverted into others without great 
loss to its owners. This fact was not due to any financial legis- 
lation, wise or unwise ; it grew out of the necessities of the war. 
New England, the chief commercial quarter of the Union, had 
seen her merchant marine rotting at her quays month after 
month and year after year. She had groaned and fretted, but 
she did not fold her hands in fretting. She went into the new 
work of home manufactures with all her strength. What would 
the nation do to support these industries that its act had called 
into being after destroying her shipping — the nation into whose 
hands she had given the control of her material interests ? Eng- 
lish capitalists did not wait for the question to be solved ; another 
mania of exportation seized them ; they deluged America as they 
were deluging the Continent, with the goods that the war had 
hitherto kept them from exporting. " The frenzy," says 
Brougham in 1816, " I can call it nothing less after the " South 
American ''experiences of 1806 and 1810, descended to persons 
in the humblest circumstances, and the furthest removed by 

their pursuits from commercial cares Not only clerks 

and laborers, but menial servants, engaged the little sum they 
had been laying up for a provision against old age and sickness." 
He is speaking of the Continental trade, but he adds : " The 
peace with America has produced somewhat of a similar efi'ect, 
though I am very far from placing the vast exports which it oc- 
casioned upon the same footing with those to the European mar- 
ket the year before ; both because ultimately the Americans will 
pay, which the exhausted state of the Continent renders very 
unlikely; and because it was well worth while to incur a loss 
upon the first exportation, in order, by the glut, to stifle in the 
cradle those rising manufactures in the United States, which the 
war had forced into existence, contrary to the natural course of 



350 ELEMENTS OF POLITICAL ECONOMY. 

things Eighteen millions worth of goods, I believe, were 

exported to North America in one year, and for a considerable 
part of this no returns have been received, while still more of 
it must have been selling at a very scanty profit.'^ 

§ 299. The first session of Congress after the war began two 
months before the date at which the double duties on imports 
would cease. President Madison in his message called attention 
to the effect that the war had had upon manufacturing indus- 
try ; " it has made among us a progress, and exhibited an eflS- 
ciency which justifies the belief that, with a protection not 
more than is due to the enterprising citizens whose interests are 
now at stake, it will become at an early day not only safe against 
occasional competition from abroad, but a source of domestic 
wealth, and even of external commerce." Of the numerous 
petitions which urged the same facts upon Congress, that of 
the cotton-spinners excited most attention. This industry em- 
ployed some 100,000 persons, and produced goods of the value 
of $24,000,000, having increased nine-fold during the war; 
it consumed American cottons, and thus contributed to the pros- 
perity of the South. For this reason, apparently, it received 
the support of some Southerners, notably that of John C. Cal- 
houn. After hot discussion, a duty of thirty, twenty-five and 
twenty percent, was laid on cottons, descending every two years, 
and $7.50 a ton on pig iron. The whole tariff was a sort of com- 
promise between protection and free trade; like its predecessors, 
it even fell short of what its authors expected, and formed — as 
we have seen — no effectual barrier against excessive and specu- 
lative imports. The years when it was in operation were years 
of distress and embarrassment; the tale of bankruptcies length- 
ened out day by day ; the value of home produce and of all sorts 
of property declined. The revenue showed a yearly deficit, and 
the national currency fell off fifty-nine per cent, in three years, 
indicating a general stagnation in commerce. All interests suf- 
fered, notably the farmers, who largely petitioned against 
duties, and talked as if our government could repeal the 
English corn laws. The manufactures of earthenware, glass, 



OUR FIRST GOOD TARIFF. 351 

white and red lead, wholly disappeared ; that of iron was at the 
point of extinction. The manufacturers never ceased to peti- 
tion Congress to extend to them even a fraction of the protection 
enjoyed by their English and French rivals. 

When Congress met in December 1823, President Monroe 
for the second time urged the adoption of additional duties 
upon imported manufactures, and in January a new tariff bill 
was reported. It proposed higher rates of duty because '' what 
in 1816 was called ' a moderate protecting duty,' would scarcely 
have been adequate protection against a fair and liberal Eu- 
ropean competition, but was absolutely nothing against the 
oppression of wealthy foreign manufacturers, who can afford 
cargoes of their goods at reduced prices or at no prices, in order 
to break down a growing rival, and indemnify themselves by 
fleecing the country afterwards.'' The chief advocate of the 
measure was Henry Clay, of Kentucky ; its chief opponent 
Daniel Webster, of Massachusetts. The same antagonism of 
their views had been brought out in the debate on the amount 
of the duties to be imposed in 1816. New England had 
already invested a large amount of money in manufacturing, 
but not so much as to make that ■ a controlling interest ; her 
vote, which was for Free Trade before the war, was now divided 
(15 to 23). As a large majority of the South were now op- 
posed to the policy which had called their cotton-growing into 
existence and had given it the command of the home-market in 
the years of its weakness, the bill was carried by the votes of 
the Middle and Western States. For the first time the country 
had a tariff that was, both in its purpose and in its effects, pro- 
tective. One marked defect it had ; the duties on woollen 
goods, both in their amount and the manner of their imposition, 
were far from satisfactory. This manufacture languished while 
all others throve. A bill to remedy this was passed by the 
House in 1827, and lost in the Senate, which it reached too late 
for passage. 

§300. In December 1828, the Report of the Secretary of 
the Treasury, Mr. Rush, called attention to the general pros- 



352 ELEMENTS OF POLITICAL ECONOMY. 

perity that had followed the adoption of the tariff of 1824, 
and especiallj the way in which it had given the country such 
a measure of industrial dependence, as prevented the European 
panic of 1826 from seriously affecting American interests ; he 
suggested an increase of some leading duties. At the end of 
January the tariff of 1828 was reported and passed after a bril- 
liant debate, io which Mr. Webster now took the aflfirmative 
side, declaring that New England was now for protection. The 
South complained that they had reaped none of the advantages 
of the new system ; that they were falling off in wealth rather 
than advancing — complaints probably due to the growing contrast 
between the regions blighted by slave labor and those blessed 
with free industry. With some changes in the method of as- 
sessing duties, and a few in their rates, this tariff remained in 
force till 1832. 

" We cannot manufacture, said Senator Hayne, of South Carolina, 
in 1832, " except as to a few coarse articles ; slave labor is utterly incapa- 
ble of being successfully applied to such an object. Slav^es are too im- 
provident ; too incapable of that minute, constant, delicate attention 
and that persevering industry which is essential to the success of manu- 
facturing establishments." 

§ SOL How did the country prosper under the new system, 
as compared with the old ? " If I were to select," says Henry 
Clay in 1831, "any term of seven years since the adoption of 
the present Constitution, which exhibits a scene of the most wide- 
spread dismay and desolation, it would be exactly that term of 
seven years which immediately preceded the establishment of 
the tariff of 1824.'' As to the state of the nation when he 
spoke : " We behold cultivation extended, the arts flourishing, 
the face of the country improved, our people fully and profitably 
employed, ... a people out of debt; land rising slowly in 
value, but in a secure and salutary degree ; a ready, though not 
extravagant market for all the surplus products of our industry ; 
... our cities expanded and whole villages springing up as if 
by enchantment; our tonnage, foreign and coastwise, swelling 
and fully occupied; ... the currency sound and abundant; 



SOUTH CAROLINA TRIES NULLIFICATION. 353 

the public debt of two wars nearly redeemed, and, to crown all, 
the public treasury overflowing — embarrassing Congress not to 
find subjects of taxation, but to select objects which shall be re- 
lieved from impost. If the term of seven years were to be se- 
lected of the greatest prosperity which this people have enjoyed 
since the establishment of their present Constitution, it would be 
exactly that period of seven years which immediately followed 
the passage of the tariff of 1824." 

The tariff of 1828 imposed a large number of duties for reve- 
nue upon articles (tea, coffee, &c.) not produced in the United 
States, in opposition to the wishes of Clay and the consistent 
protectionists. In 1882 these were removed or largely reduced, 
while some of the protective duties were slightly so, partly with 
a view to reducing the revenue, which was considerably in 
excess of the needs of the government. 

§302. In 1833 the question took a political shape; South 
Carolina, with the moral support of Virginia, Georgia and Ala- 
bama, announced her purpose to resist the enforcement of the 
national tariff legislation. President Jackson, who had always 
advocated protection, was now full of the impending danger to 
the Union ; he saw all questions through the one medium, and 
advised a reconsideration of the tariff in detail and the removal 
of some of its duties. Henry Clay, being likewise a candidate 
for the presidency, saw matters in much the same light. He 
was an honest man at heart, who " would rather be right than 
be President," but the concealed magnet in the White House 
often makes the most honest compasses deflect from the north star 
of principle. He introduced a compromise bill into the Senate, 
providing for a gradual lowering of duties, by which they were 
to be reduced to twenty per cent, on the 30th of June 1812. 
It was only three weeks before the end of the session, but the 
bill was carried through both houses before the session closed. 
Till 1842 the process of reduction went on, and the gradual clos- 
ing of American factories and workshops went with it. The capi- 
tal of the country, the accumulations of years of protected and 
prosperous industry, being driven from manufactures, sought a 
23 



354 ELEMENTS OF POLITICAL ECONOMY. 

channel for investment in other quarters. The sale of public 
lands rose in 1836 to $24,877,179, or more than ten times what 
had been the average rate. There was an enormous expansion 
of the currency and inflation of prices. Imports increased 
seventy-five per cent. Speculation ran riot ; wild-cat banks grew 
up as fast as mushrooms. The craziest schemes to become rich 
without the trouble of earning wealth by hard work, found ready 
listeners. M. Chevalier, who visited America at this time, says in 
the account of what he saw in 1835 : " Everybody is speculating, 
and everything has become an object of speculation. The most 
daring enterprises find encouragement; all projects find sub- 
scribers." Places were sold as building lots that lay far beyond 
the range of settlement for years to come; cities grew up in a 
night — on paper; sites of houses and streets that lay in pesti- 
lential marshes, or on naked precipices of rock, or six feet under 
water, found eager buyers. No new channels for industrial en- 
terprise were opening; the old were closing; the enterprise that 
must find an outlet somewhere sought all manner of absurd and 
hazardous channels. We were to produce all sorts of raw ma- 
terials that the old world had monopolized ; the morus multicau- 
lis was to give us cheap silk for the whole world. Then in 1837 
came the crash, the banks suspended specie payment, and the 
country wakened up from a feverish dream to find itself on the 
point of bankruptcy. The revenue fell ofi" so greatly that the 
government was obliged to ask loans, first in the home and then 
in the foreign money market, and met only with rebufi" in both, 
although the loan asked was less than a fourth of its ordinary 
income. Labor ran begging for employment, and during 1839— 
1841, the cry was heard far and near, " Give me work, only give 
me work ! Make your own terms ; myself and family have 
nothing to eat !" 

By 1840 the country was thoroughly aroused, and elected a 
protectionist President, after the fiercest political campaign in 
our history. When Congress met in December of 1841, Gen. 
Harrison was dead, but his successor, Tyler, recommended an 



THE DALLAS TARIFF AND ITS METHODS. 355 

increase of duties in a conciliatory spirit. The tariflF of 1842, 
one of the best and most protective ever enacted, was adopted, 
and no more threats of secession were heard. The prosperity 
that free trade was to brins; to the South had not been achieved, 
and the preservation and extension of slavery now absorbed the 
attention of that section. The new policy bore the old fruits; 
languishing industries were quickened into life; with the growth 
of the power to purchase, foreign commerce revived; govern- 
ment reaped a large revenue, and the finances of the country 
were again in a satisfactory state. The home production of great 
staples was multiplied, and the prices of many of them fell. 
A better and more trustworthy currency came into circulation. 
Then, in 1846, the policy was changed once more, and that 
of military aggression upon weaker neighbors at home suc- 
ceeded that of industrial resistance to more powerful nations 
abroad. England, after some five centuries of rigid protection, 
had adopted the policy of free trade, and was preaching it with all 
her eloquence to the rest of the world. Mr. Robert J. Walker, 
secretary of the U. S. treasury, was one of her disciples. " Let 
them alone^^ he told Congress, " is all that is required of man ; 
let all international exchanges of products move as freely in 
their orbits as the heavenly bodies in their spheres, and their 
order and harmony will be as perfect, and their results as bene- 
ficial, as in every movement under the laws of nature when un- 
disturbed by the errors and interference of man." But even a 
Democratic Congress had not quite forgotten the past, nor broken 
so far with the Democratic precedents of 1824-1828. The 
Dallas ^arifi" of 1846 was still protective. It adopted, indeed, 
the vicious method of imposing ad valorem duties, while those 
of 1842 had been specific; and it taxed a host of articles that 
better tariffs, before and since, put into the free list. But it 
still imposed duties of from 40 to 20 per cent, upon the 
great staples of manufacture. Had these rates been calculated 
on the average price of the several articles, and then made spe- 
cific at that figure, the eff'ect would have been far better. For 
ad valorem duties make the home market far more dependent 



356 ELEMENTS OF POLITICAL ECONOMY. 

upon the fluctuations of the foreign market, and in the long run 
bring it under the power of the trader and the foreign producer. 
Thus during the years 1846-9 English iron was cheap, selling in 
New York at $40 a ton, and largely driving the home producer 
out of the market. One- third of the furnaces and iron-mills 
of Pennsylvania ceased operations soon after the tarilff was 
enacted, many being sold out by the sheriiF; the rest were sorely 
crippled, and the amount of their production greatly diminished. 
The iron men met, and in a memorial, prepared by Stephen Col- 
well, expostulated with Congress, showing that the ruin, which 
was impetiding over their industry, would be a costly injury to 
the whole country. They predicted that if home competition 
were out of the way, the nation would soon learn that the price 
of British iron was fixed, not by the cost of production but by 
the demand made upon that market, and the dependent condi- 
tion of their customers. Their remonstrances were unheeded; 
the work of destroying a great industry went on, and its traces 
may be seen in the old furnaces of the Alleghany ridges. In 
1851-4, when home competition was virtually out of the way, 
iron sold for $80 a ton, whereas native iron had been furnished 
for $60. When English iron was cheap, the duty was also low, 
and the native producer was driven from the home market. 
When it rose in price, the duty rose also, and enhanced its value 
to a degree that greatly checked its consumption. But this rise 
gave no security to the home producer to increase his turn-out, 
or to the capitalist to begin iron-works. Neither could tell how 
soon a real or an artificial cheapness might destroy his market 
again. There was no security for the home producer, while the 
home consumer was fleeced to the uttermost. 
^ The Dallas tarifl" lasted till 1857, and inflicted injuries upon 
' nearly all our industries, preventing the influx of capital in that 
direction. To compensate for this we were to have an unlimited 
foreign market for breadstuff's since England had repealed the 
corn laws. The more we bought of her, the more we must sell 
her, as " commodities are paid for with commodities." The 
commodity witl which we chiefly paid was gold. The tariff 



THE slave-holders' POLICY. 357 

increased the dependence of the country upon both the buyer 
and the seller of foreign markets. Its bad effects were alleviated 
by the discoveries of gold in California, which gave an impulse 
to all kinds of business. In 1857 Coniiress reduced the duties 
by twenty-five per cent. This was not a sudden change of 
policy, but the crowning of the edifice that had been building 
for eleven years past. It at once intensified all the unwhole- 
some tendencies in our commercial and industrial life, turned 
capital once more from production to speculation, and led to 
a large and varying increase of importations. Another great 
panic followed through the collapse of unsound enterprises, and 
carried with it many that were sound. Every one had been buy- 
ing at any price ; every one made haste to sell, and found no 
customers. Lands in what was then the far West, by whose 
purchase fortunes were confidently expected, were sold by the 
county to pay the taxes. The treasury was again depleted, and 
years came in which it must borrow the means to carry on the 
government. 

In 1860 the Republican party, composed very largely of the 
old Protectionist party, won its first national victory, and broke, 
for the third time in sixty years, the Democratic succession of 
Presidents. In 1861 the war for the Union began, and the 
Morrill tarifi" was enacted, and up to the present writing that 
policy has been persisted in by the nation. Not that that tariff, 
either in its original form or as subsequently modified, is satis- 
factory in its application of general principles. It has been made 
more satisfactory, indeed, by fairer protection to the woollen in- 
dustry, and by the removal of duties that had been laid upon 
articles that cannot be produced at home. Another great defect 
in our financial system was the heavy internal revenue duties 
levied until after the war, — duties that took away with one hand 
nearly all that was given with the other. 

When the war began American industry was unable to furnish 
all the materials to arm and equip the national forces. Steel and 
cloth, and blankets, had to be got from England ; and fortunately 
the seas were open. Long before it closed all these elements 



358 ELExMENTS OF POLITICAL ECONOMY. 

of the national defence were produced at home, of as good 
■juality and in quantities large enough to meet any demand. 
But from the very start to the close of the struggle the North 
reaped the advantage of the possession of that diversified in- 
dustry which had perpetuated itself in the face of so many dis- 
couragements, and now sprang into vigorous life; — while the 
merely agricultural South was continually hampered through the 
absence of manufactures, of the middle class who sustain them, 
and of the industrial habits which they cultivate. 

§ 303. Nine times in one hundred years the American people 
have changed their financial policy, sometimes carried from Pro- 
tection toward Free Trade by the influence of specious theories, 
but as often driven back to the policy of Protection by hard expe- 
rience. The two periods of longest continuance in any policy is 
the Protectionist period which followed the establishment of the 
government (1789-1801), and the Protectionist period in which 
we now are living. Four times the scaiFolding of the tariff has 
been torn down from the uncompleted edifice of our industrial 
development, and as often the work has been begun again — if 
not from the foundation, yet from a point much less advanced 
than had been reached under the previous protective tariff. This 
time it seems to be the nation's purpose that the scaffold shall be 
kept up until the roof is on. 

§ 304. It is admitted on all hands that the effect of our pres- 
ent protective tariff has been an extraordinary development of 
our manufacturing industries, and a rapid advance toward a 
period when we shall be altogether independent of the rest of 
the world as regards all the great staples which are capable of 
economical production on American soil. The census of 1870 
showed an increase of more than one hundred and eight per 
cent, in the value of our manufactures; that of 1880 is ex- 
pected to show a still greater advance. Between these two 
censuses came the great Centennial Exhibition, which was to 
multitudes of the American people a revelation of the growth 
of our industries in quality and in quantity alike. No part of 
that vast display excited so much patriotic satisfaction as did 



PROF. ROULEAUX AT THE CENTENNIAL. 359 

the accumulated results of American skill and ingenuity ex- 
hibited in Machinery Hall. Prof. Rouleaux of Berlin was at 
least as well fitted as any of our foreign visitors to pronounce an 
estimate of the whole exhibit of our industries. He declared it 
to be one for which Europeans were quite unprepared as regards 
its abundance and magnificence, and the admirable adaptation of 
means to ends in all our processes and implements. In his 
opinion American manufacture has escaped a great mischief 
in aiming at good quality rather than mere cheapness in its 
products; and he deplores the fact that Germany has injured 
herself and lost her hold on the best customers by following the 
lead of England in this respect. In many lines of manufacture, 
such as cottons of all the lower grades, American goods take pre- 
cedence of every other in point of excellence ; and in England 
itself a demand exists for our cottons as the most trustworthy 
that are to be found. 

§ 305. Prof Rouleaux very justly criticised as unsatisfactory 
those branches of our manufactures which employ the arts of design. 
He found clumsy earthenwares, ill-designed and crudely-colored 
carpets, an excess of allegorical motive in our silver and other 
ornamental wares, and a general failure to put the finest materials 
in the world to the most efiective use. Those criticisms would 
hardly be just if repeated now. The year 1876 was a time of 
new beginnings in the development of those branches of manu- 
facture which demand the application of artistic taste and skill. 
The sight of what other countries had done in this department 
was a stimulus to our own efibrts, and in the following years the 
application of art to manufactures advanced with rapid strides. 
Much is still needed, especially in the general diffusion of a 
knowledge of the arts of design through our public-school 
system; but a country which is admitted to have outstripped 
every other in the quality of its wood-engraving must possess 
in its own people artistic resources which, if developed, will 
make it altogether independent of the help of foreign de- 
signers. 

§ 306. In the development of American ingenuity the pro- 



360 ELEMENTS OF POLITICAL ECONOMY. 

tective policy has played a remarkable part. Mr. Mill's sug- 
gestion, that the establishment of an old industry among a new 
people is followed generally by improvements in its methods, is 
fully confirmed by recent American experiences. In many manu- 
facturing establishments there is a standing oifer of rewards for 
such improvements devised by the workmen. American im- 
provements are not monopolized by our manufacturers. We 
have no law against their export, such as England maintained 
for nearly a century, and Mr. McCulloch defended in his Dic- 
tionary of Commerce. Our models of axes, saws and other 
tools are reproduced in Birmingham ] our improvements in the 
Bessemer-steel apparatus are copied in the North of England ; 
sewing-machines are made abroad under all our expired and 
many of our unexpired patents, royalty being paid in the latter 
case ; and so- forth. An English authority laments the fact that 
nearly every labor-saving invention of recent years is of Amer- 
ican origin. The centrifugal apparatus for refining sugar is 
a notable exception to this rule ; but it is the rule. The cost 
of some of the great staples has been reduced, not only to 
America, but to the world, by the protective policy, which set 
American invention to overcome Nature's resistance to our get- 
ting them cheaply. And we look for still greater results of this 
kind in the future. 

§ 307. Our tarilBF is found fault with because it does not 
make men prudent and virtuous, besides giving them the oppor- 
tunity to become prosperous. (1) It is said to be responsible for 
the over-production which has characterized some branches of 
manufacture. Thus, although we do not produce cotton goods 
sufficient to supply the national demand, we do produce more 
than enough of the more homely and substantial sorts; and at 
times our cotton-factories are forced to diminish their production 
below their capacity, and to reduce the time and wages of their 
work-people. The same evil occurs, and more frequently, in 
Lancashire under Free Trade. The common cause in both 
countries is a defective judgment as to the capacity of the 
market, and no legislation can be devised which will obviate 



DOES THE TARIFF MAKE MEN IMMORAL? 361 

the difficulty. There still are plenty of openings for the in- 
vestment of new capital in manufactures, if our manufacturers 
will study the lists of imports to find where the home supply 
is inadequate to the home demand. 

§ 308. The depression of 1873 and the following year grew 
out of an excessive construction of railroads in America, and a 
consequently feverish stimulation of the iron and steel indus- 
tries. The great outlays in wages to iron-workers imparted a 
similar impetus to textile and other manufactures, which con- 
tinued until the collapse of the Northern Pacific Railroad pre- 
cipitated a panic far less severe than those of 1837 and 1857, 
but whose efiects were felt for years. 

§ 309. (2) Again, in the course of time a duty becomes exces- 
sive through a change in the conditions of production, and it is said 
that the American manufacturer, if the home competition do not 
prevent this, will raise his price to the highest figure permitted 
by the tariff, and will make excessive profits by doing this. 
Whether this be an actual situation or not, it is a conceivable 
one. There are two remedies for it. One is found in the 
certainty that excessive profits will increase home competition 
by leading to a large investment of capital in that particular in- 
dustry; another may be found in the reduction of the duty to 
an amount sufficient to compensate the disadvantages, as regards 
labor, capital, taxation and so forth, under which the American 
producer lies. The principle of protection justifies no duty of a 
higher rate than this. In so far as the tariff goes beyond it, 
it is not protective, but prohibitive. 

But it is altogether absurd to abuse the tariff because business- 
men will not resist the temptation to take advantage of such a 
situation as has been supposed. The tariff will produce no 
higher results than the average morality of the business com- 
munity. This average is in America at least as high in the 
manufacturing class as in any other. Dr. Lyon Playfair thinks 
he finds in the honesty of our manufactures the traces of the old 
Puritan passion for righteousness. His praise may be deserved, 
without being true of all our manufacturers. But certainly 



362 ELEMENTS OF POLITICAL ECONOMY. 

neither he nor any impartial observer would select any of our 
protected industries as furnishing comparatively glaring in- 
stances of our want of a high moral standard. He would 
select rather the grain, stock and oil gambling of the trading 
classes and the management of some of our great railroads. 

§ 310. It is charged against aur protective system that it has 
resulted in the destruction of American comnierce. Objectors 
of this kind use the word " commerce " in the narrow and con- 
ventional sense which has been affixed to it by English writers, 
and which corresponds to the situation of England. They mean 
by it the export and import of commodities. The true sense of 
the word is " the exchange of services or commodities between 
persons of different industrial functions." In this sense Protec- 
tion is a great promoter of commerce. It creates variety of in- 
dustrial function within the nation, and fosters the most rapid 
and continual interchange of services between persons thus dif- 
ferentiated. It promotes association between meml&ers of the 
same nation by producing variety in their employments ; while 
Free Trade between more and less advanced nations always has 
resulted in the destruction of asssociation among the people of 
the less advanced, and in their reduction to a monotony of occu- 
pation. There is no vaster commerce in the world than that 
which takes place between the fifty millions of people who live 
inside the line drawn by the American tariff, and who are grow- 
ing in mutual interdependence with every year of its existence. 

§ 311. As was said in the tenth chapter, we cannot accept the 
amount of exports and imports as affording any fair test of the 
country's prosperity. Such a test could have been devised only 
in a country which had made itself dependent upon others for 
supplies of food and raw materials, and for customers for its 
manufactures. But, even when gauged by this test, America is 
found to have made no retrogression. The proportion of exports 
of manufactures to the population was greater in 1880 than in 
1860. This export might be much greater if we took the 
proper steps to increase it. It might be expected, for instance, 
that the nations of South America would be large customers for 



OUR FREE TRADE IN SHIPS. 363 

our manufactures. We buy of them great amounts of coffee, 
hides and wool. We can furnish them with many manufactures 
which they have no ambition to make for themselves, and in 
some cases not the resources. But our chief trade with that 
part of the continent is conducted in English ships, which go 
thither with cargoes of English wares, and come back, by way 
of New York, with cargoes of South American produce, which 
they replace by cargoes of American wheat. When we secure 
direct commercial intercourse with the countries which have few 
manufactures, we may expect to find foreign markets for our 
own. At present we have such intercourse only with countries 
largely engaged in manufacture. 

§ 312. It is charged that the Protectionist policy has debarred 
us from getting our fair share of the carrying trade of the world. 
But American citizens are free to own and sail ships built in any 
dockyard of the world. Our laws place such vessels under no 
disadvantage. We admit ships of every build on equal terms 
to our ports, and remit many of the charges, such as lighthouse 
dues, which are charged in the ports of other countries. It is 
true that by a law passed in Washington's first administration, 
and continued in force by every party which has been in power 
since that time, ships of foreign build are not admitted to Amer- 
ican registration. They cannot carry the American flag, and 
our government assumes no responsibility for their safety. But 
American registration confers no commercial advantages. On 
the contrary, it brings with it ser'ious disadvantages. The laws 
for the protection of American seamen impose burdens on the 
owners of ships in our registration much heavier than are borne 
by others. Our consulate system collects far heavier fees from 
them ; our systems of State taxation impose, as a rule, much 
heavier fiscal burdens on them ; and in return for these the 
vessel which has American "registry receives no compensatory 
advantages. The nation does not maintain a decent navy foi 
its protection ; it does not exert itself with any remarkable 
energy in the defence of American interests, property or 
citizens abroad. In these respects it is much behind Eng- 



364 ELEMENTS OF POLITICAL ECONOMY. 

land, which is ready to continue registration and efficient pro- 
tection to any ship which Americans may purchase from 
British owners. 

In fine, we have absolute Free Trade in the matter of mer- 
chant marine. It is to this, in great measure, that we owe the 
decline in American shipbuilding — a decline which began in 
1855, six years before the Morrill Tariff was enacted. We are 
almost the only country which has acted on the laissez /aire 
maxim in this matter. Great Britain built up hers by a system 
of subsidies, at first paid openly, afterward under the cover of 
payment for carrying the mails. France has a subsidy system 
more thorough and extensive than any other country of Europe. 
In America the same method was followed until 1855, when, on 
recommendation of the Senate Committee of Commerce — Mr. 
Jefferson Davis was chairman — subsidies were discontinued. 
Their resumption is demanded now by many of the most in- 
fluential commercial bodies in America, and is expected from 
the Congress in session at this writing. 

§ 313. Protection corresponds to the purpose of the Amer- 
ican people to be a complete and entire nation, at peace with 
every other in so far as in us lies, desiring no advantage at the 
expense of any other, wishing for them that fulness of national 
life which we desire for ourselves, but as independent of their 
good or ill will as the resources of the national domain will per- 
mit us to be. It sometimes is denounced as irreligious and self- 
ish, but only by those who have taken no pains to understand it. 
There is a religion. The Saturday Review says, which became 
current in England about 1851, made up of " Free Trade and 
the pleasanter parts of Christianity;" with that religion Pro- 
tection comes into conflict. But there is nothing in it which is 
inconsistent with the Golden Rule : " Whatsoever ye would that 
men should do to you, do ye even so to them." 



THE ECONOMY OF INTELLIGENCE AND EDUCATION. 365 



CHAPTER THIRTEENTH. 

The Science and Economy of Intelligence and 

Education. 

§ 314. In presenting what have been found to be wise methods 
of national economy, and in attempting the solution of economic 
problems, it has again and again been pointed out in the fore- 
going chapters, that the education and the consequent high in- 
telligence of the people is essential to the prosperity of a nation. 

We have seen that an agriculture that is not directed by scien- 
tific knowledge is wasteful in itself, and will at last be unable to 
meet — much less to outrun — the ever-increasing demand of the 
people upon its productiveness. Experience also shows that, so 
long as farming is conducted in an unintelligent way, it will 
never be anything but a distasteful drudgery, which will drive 
the best young men of the agricultural class into the cities, and 
to occupations that employ mind as well as muscle. 

We have seen that the notion that labor will always leave an ill- 
rewarded employment for one that is better paid, is disproved by 
facts. The uneducated farm-hand of Dorsetshire, with his 
mental horizon no larger than the visible one, shrinks from 
pushing out into an unknown and untried world to seek his for- 
tune, and puts up with ten shillings a week, when a few shires 
farther north he might earn a competence. The Flemish hoer 
works for a half or a third what he might get a dozen miles to 
the south, because he has never had the chance to pick up the 
small amount of French that would tit him to labor in Brabant 
or Brussels. 

We have also seen that improvements in methods and in 
machinery, by discontinuing the employment of some class of 
workmen, inflicts great injury upon that class if its average of 
intelligence be low, and its power of adapting itself to a new set 
of conditions be slight. And we have also seen that all these 



366 SOCIAL SCIENCE AND NATIONAL ECONOMY. 

improvements make a larger demand upon the workman's intel- 
lectual gifts, and can only be carried out to the best advantage 
where these receive a fair measure of cultivation. 

It has also been seen that the condition of the working classes 
is capable of very great improvement, through the adoption of 
certain methods of economy — labor-banks, co<5perative societies, 
building societies, and the like — which demand the diffusion of 
a considerable measure of knowledge if they are to be well sup- 
ported and wisely managed. 

We have seen that the sanatory condition of a community is 
capable of very great improvement only when the conditions 
of life and health are understood by the people. And upon this, 
as has been said, depends in large measure the industrial capa- 
city and efficiency of the people. English statists estimate that 
every death represents one hundred and sixty-six days' illness, 
during which the sufferer, if a working man, is thrown upon the 
charity of his friends or of society for his support. The conse- 
quent total to be subtracted from the productive and accumula- 
lative powers of the people is immense. 

We have seen that the protective policy is vindicated by its 
friends and conceded by its enemies to be a measure of national 
education, whereby special advantages are given to the home 
producer until he has learnt the habit of manufacture and 
acquired skill in its methods. A natural accompaniment of such 
a policy is an active national effort for the technical training of 
those who are competent to receive it. 

§ 315. These and other considerations like them lead us to see 
the importance of education as a part of a wise national economy. 
The small outlay of the national resources that is necessary to 
train every citizen to the highest rank in industrial eflSciency 
that is possible to him, is well expended in the purchase of a 
larger gain to all classes. It is one of those wise sacrifices of 
present for future advantage, which distinguish progressive 
societies from those that are stagnant. 

But a national education can never be a merely industrial 
education, — can never be even first and chiefly industrial. The 



NATIONAL EDUCATION IN ANTIQUITY. 367 

industrial state is but one aspect of the national life, and an eda- 
cation that could contemplate only its ends would come far short 
of the training required to fit the citizen for his place in the 
body politic. It would also defeat its own ends by leaving the man 
undisciplined in many duties and in right methods of thought, 
which very greatly influence his industrial worth. On the other 
hand, there is especial need to call attention to this part of 
national education, since the conception of the nation as an indus- 
trial state is quite a modern one. Napoleon among the men of 
practice and Fichte among the thinkers — closely followed by 
Saint Simon — were the first to recognise its truth. And as in 
earlier theories of national life, so in earlier methods of educa- 
tion, other things were regarded and this neglected. 

§ 316. A National Education, limited in its range indeed, but 
broad enough to embrace the whole scope of the nation's voca- 
tion, was enjoined upon the Jews by the Mosaic legislation. 
Especially of the moral law it is said: "These words which I 
command thee this day, shall be in thine heart [i. e., thine un- 
derstanding, thy thoughts;] and thou shalt press them upon thy 
children, and shalt talk of them when thou sittest in thine house, 
and when thou walkest by the way, and when thou liest down, 
and when thou risest up.'^ The later Jews, at a time when the 
industrial life of their nation had attained a larger development, 
required that every father, however wealthy, should teach his 
son a trade, so as to provide against all contingencies of fortune 
and enable him to avoid becoming either a pauper or a thief. 

In Greece we have two great methods of national education 
standing in very sharp contrast. The Spartan was a system of 
military discipline, of stern and unnatural restraint. It was the 
drill of an armed garrison who gave up their individual tastes, 
ideas and impulses, and submitted to an all-constraining law. 
The death of the three hundred at Thermopylae, " in obedience 
to the laws," was the crown and the flower of the life of the 
city, which produced no great men of letters, and indeed few 
great men of any sort. The Athenian method was a full and 
free development of human nature, especially on its intellectual 



368 SOCIAL SCIENCE AND NATIONAL ECONOMY. 

and aesthetic sides. In Athens, more than in any other land or 
time, we have the results of the extension of the finest culture 
of mind to the whole free population of a state. Of formal 
teaching and learning there was comparatively little, except the 
memorizing of Homer and other poets in the schools ; the new 
science of mathematics seems to have taken its name from the 
fact that it was the first branch of knowledge that was not picked 
up — like reading, writing, grammar, politics, the arts — from one's 
fellow-citizens, from being at the theatre, or from the daily con- 
templation of great works of art, the sight of inscriptions, &c. ; 
but needed to be learned by direct and formal application. Yet 
their intellectual education was perfect; no accumulations of 
knowledge or improvement of methods have enabled any 
people or class to attain a higher or more balanced cultivation of 
the mind. But they lacked moral balance and self-restraint, and 
so became the victims of their own cleverness, as Socrates saw 
and told them. 

If the New Testament teaching be true, both these opposite 
methods were right and capable of being united, because there 
is in man a higher or spiritual nature which education is to 
awaken into life and call forth into activity and vigor ; while 
there is also in man a lower or animal nature, by which he must 
not be governed, and which must be brought under restraint 
and discipline, 

§ 317. The Roman inherited the Greek method of education, 
but never gave such prominence to it. The Greek governments 
were systems of education ; Roman education was a branch of 
the civil service. The great university of Alexandria, the 
Mousewn, was not only cherished by the new rulers, but repro- 
duced in other chief cities, especially by the Athenaeum at 
Rome. In lesser places, what we might call colleges, professional 
chairs and schools were founded, and considerable zeal displayed 
for the education of the higher class of citizens. But the learn- 
ing chiefly cultivated had no relation to the practical life of the 
times. Much attention, for instance, was given to rhetoric and 
oratory, although all real use of these had disappeared with the 
cessation of free popular assemblages. 



MEDIEVAL EDUCATION. 369 

In the BjzaDtine Empire this Imperial system was perpetuated 
down to the capture of Constantinople without the slightest 
change even in the text-books. Except during the brief period 
when Julian forbade the Christians to use the old classics, no 
Christian literature of any sort was admitted to the schools of 
the Eastern Empire, and the use of the Scriptures in such a 
place would have been deemed sacrilege. 

In the west, Karl the Great sought to trace out and revive the 
old imperial foundations throughout his empire, and the monastic 
schools at Fulda, Aachen, St. Gall, and other places, were prob- 
ably the perpetuation of his eflForts. More important still was 
the schola palatiiia^ or court school, which he made an adjunct of 
his household, and which became a tradition of the royal court of 
France. It was afterwards transplanted to the new capital, Paris, 
and it enjoyed the service of many able men, such as John 
Scotus Erigena, who came over from Ireland, then the land of 
Christian schools and Christian learning. Karl adopted as the 
basis of instruction in the higher schools the syistem or classifica 
tion of Boethius, in which all learning was divided into the 
seven liberal arts, of which three (the trinuiii) were taught in 
the higher classes, and four (the quadriviuni) in the lower. 
Hence the phrase " Master of Arts.''^ In the lower schools 
reading, writing, arithmetic and singing were taught. This 
classification lasted till the revival of classical learning. 

Out of the court school, or the ecclesiastical school which 
succeeded it, grew the University of Paris, the mother and 
mistress of all European universities, except Bologna and Oxford, 
whose possession made France in the earlier Middle Ages the 
Kingdom of the University, as Italy was the Kingdom of the 
Holy See, and Germany that of the Holy Roman Empire. The 
rise of the University was so very gradual that the steps can 
hardly be traced, but at the time when Abaslard was drawing 
tens of thousands of pupils to Paris to hear him expound the 
scholastic philosophy, and partly perhaps through his great suc- 
cess, the University had taken a distinct shape, which was 
chiefly changed by the division of the professors into separate 
24 



370 SOCIAL SCIENCE AND NATIONAL ECONOMY. 

" faculties/' and the students into '^ nations," and this formed 
the model after which others were erected in Bohemia, Germany, 
Spain and Scotland. These institutions were hardly instruments 
of popular education. They attracted, indeed, an immense body 
of students to a few great centres of culture } we read of forty 
thousand at the University of Oxford. But their object was to 
form a learned class, not to reach the whole people. He who 
received it betook himself to a new sort of life ; he did not go 
to the schools to learn what would fit him to fill his place in the 
class in which he was born, but to leave that class and enter 
another. It was a training for grown men, not for children. 
Only monastic schools were open to the latter in the earlier 
Middle Ages ; and when others were established they were 
chiefly preparatory to the universities, and imparted a highly 
abstract and artificial training in a very tiresome and inadequate 
way. They were generally trivial schools in which were taught 
the arts of grammar, music and arithmetic, i. e., the Latin 
grammar of Donatus, the psalms and hymns of the Missal and 
their ordinary tunes, and the elements of computation. The 
only Latin literature read was the distichs of Cato and a Latin 
version of ^sop's Fables; but in course of time, the Catechism 
(i. e., the Creed, the Lord's Prayer and the Decalogue) were 
added. Even with the revival of the study of classic learning, 
no change was made in these schools. Luther went to school 
under one of the new Humanists, but read nothing of the new 
literature until he went to the University. 

§ 318. To the Reformation, and especially to Luther, popular 
education owes a very great impulse. In some sense we may say 
that it began at that date. The claim put forth that the Bible 
should become the people's book, and the efforts to circulate the 
new translations of it, as well as other edifying books, involved, 
as a correlative, a general effort to make the new literature ac- 
cessible to the common people by a general diffusion of know- 
ledge. But Luther aimed at diffusing a national education that 
should be truly such. In his appeals to the German cities, urg. 
ing them to set up good schools — '' not such as have been hereto 



THE REFORMATION AND EDUCATION. 371 

fore, where a lad learned at his Doaatus and his Alexander for 
twenty or may be thirty years, but never learned them " — he 
especially pleads for the general study of letters — " good poets 
{ind histories," — and for the formation of city libraries of all 
sorts of good books as the complement of the school system. 
He would have the chronicles of their own country hold a promi- 
nent place in these collections. He would thus provide not only 
a competent body of educated men for the service of church and 
state, but also " a plenty of fine, learned, rational, honorable, 
well-brought-up citizens," as " the best and costliest possession 
of a city;" 

The Calvinistic Reformers laid still greater stress upon know- 
ledge and intelligence, as needful for every true Christian. It 
was their ideal to see the Bible in the hands of a community 
competent to understand it. In Switzerland, Germany, Holland 
and France, they carried out this principle with great thorough- 
ness, but nowhere more completely than in Scotland. Knox 
and his associates and successors worked for the establishment 
and endowment of English and Latin schools, and the improve- 
ment of the universities, as zealously as for the establishment of 
the Reformed doctrines. In spite of some temporary defeats, 
they carried their point, and the Scotch became a far better 
educated and more intelligent people than their richer neighbors 
at the other end of the island. In England the Reformation 
was a measure carried through by the government and the aris- 
tocracy ; it was not so democratic in its character, and it af- 
fected but slightly the economic condition of the people. The 
agitation for a j^lan of popular education, to reach and provide 
for the most numerous class — as the higher and middle classes 
have been provided for by old foundations and private schools — 
has hardly been mpoted there till within the present century. 
The first appropriation of money for the purpose was the vote 
of £100,000 in 1847, and only in our own times has there been 
adopted a plan of national education large enough to reach the 
whole people. It has, of course, been opposed, (1) by some 
few consistent free traders, like Herbert Spencer ; (2) by those 



372 SOCIAL SCIENCE AND NATIONAL ECONOMY. 

religionists who regard education as a spiritual function and deny 
the power of the state to exercise such functions ; and (3) by 
those who object to the existing law, because it takes under gov- 
crnuient patronage the various Church schools that are already 
established. 

Ireland has had an excellent national school system for a good 
many years past, whose eflPects in the dissemination of intelli- 
gence forbid us to ascribe the poverty of her people to igno- 
rance. They take rank above the English in this respect. 

Our chief authorities for the history of education in the old world are 
Prof. Franz HoflFmann's Idea of a University (translated and published 
in the Penn 3Ionthly for October, 1872) ; Prof. F. D. Maurice's Lecturea 
on National Education (London, 1839), and his Learning and Working 
(London, 1855); and Karl Jiirgen's Luthera Leben (Leipsic, 1846). 

§ 319. American education was begun by the churches, and 
the higher institutions of learning nearly all originated with the 
ecclesiastical bodies, as most of them are still under their control. 
The University of Pennsylvania was, through the influence of 
Franklin, perhaps the first to arise without formal connection 
with the churches. The colleges and academies of the New 
England States, and of districts settled from New England, were 
chiefly modelled after Harvard and Yale, and drew their teachers 
from those mother institutions and their daughters. Those of 
the Middle and many of the Western States may commonly be 
traced to the educational effbrts of the Presbyterian clergy from 
the north of Ireland and from Scotland. The Puritan and 
Presbyterian elements have been the chief agencies in our higher 
educational system, and in both cases the interest and the motive 
was ecclesiastical. Religion, it would appear, was the only force 
at work in American society at large that was strong enough to 
overcome the American passion for money-making, to insist on 
the excellence of a liberal education, and thus to cherish the 
love of learning and of science till it grew strong enough to 
stand alone. Only in our own days have institutions of the same 
character been endowed in a few places by the state govern- 
ments. 

§ 330. Schools for popular education were very early cstab- 



OUR PUBLIC SCHOOL SYSTEM. 373 

lished in nearly all of the colonies. Especially in Pennsylvania 
the Society of Friends was most zealous in establishing elementary 
schools, and in imparting to all within their reach the elements 
of a good English education. At their schools in this city many 
who were not of their body received their training, and it is very 
largely to the influence of the Quaker element thus exerted that 
the Commonwealth owes the solid sense and practical sagacity 
of its best and most influential elements. But the system of state 
education originated in New England, and has only been ex- 
tended to other parts of the country within the memory of per- 
sons now living, and to the South only since the recent war. 
The progress of the system has been very rapid, and it is now 
recognised as a universally established principle that the state is 
responsible for the existence of illiteracy and of the crimes and 
violences that flow from ignorance. The system is opposed (1) 
by a very few consistent free traders, like the late Gerritt 
Smith ; and (2) by some religious bodies, which regard educa- 
tion as a spiritual function inhering in the church. 

Less can be said for the quality than the quantity of the edu- 
cation given by our public schools. Indeed we cannot too 
heartily recognise the fact that education is yet in an experi- 
mental stage among us, and that beyond the clear duty of teach- 
ing a few of the first and plainest elements of learning, every- 
thing else is open to question. We have too often forgotten that 
education is a means merely, a very flexible means to any end 
that we have in view, and that we must first fix the end by care- 
ful reflection and then with equal care adjust the means to the 
end. Education has been talked of as if there were something 
magical in the contact of a young mind with a series of school 
books and of teachers. But the magical results have not been 
forthcoming. 

Especially the notion that education — the imparting of know- 
ledge and the discipline of the intellect — was of itself sufficient 
to abolish all crime, has received a decided refutation. There 
is indeed a limited amount of truth in this notion. Crimes of 
violence, for instance, as Henry Holbeach says, very commonly 



374 SOCIAL SCIENCE AND NATIONAL ECONOMY. 

grow out of the imperfect communication of ideas and feelings 
between uneducated people. Their heartburnings " are born of 
imperfect intelligence of each other in dilemmas of conscience 
or affection, upon which such poor means of utterance as they 
have are thrown away." Hence we speak of quarrelling persons, 
if they be reconciled, as coming to an understanding. 

There is also in the discipline of the school-room, its required 
order, cleanliness and self-restraint, a powerful moral training 
for the young, if the teacher be equal to the task. And even 
the mere power to read, in the great preponderance of good 
literature over bad, and the great prominence of the best of books 
in modern society, is pretty sure to do far more good than evil 
to its possessors, taken as a whole. 

Yet our excellent fellow-citizen, Mr. Joseph R. Chandler, 
gives it as the result of bis fourteen years' devotion to the 
cause of prison-discipline, "that learning has little or nothing 
to do with preventing or promoting crime, however it may influ- 
ence the character of the act. . . . While in the lowest order 
of crime I may have found more unlettered than lettered crimi- 
nals, I have found the former more amenable to gentle moral 
dealing than the latter were." But this generalization is not 
based upon a comparison of two societies of different degrees of 
intelligence, or two stages of intelligence of the same society, 
and is, therefore, hardly justified. Indeed, the fact last alleged 
in its support, and which Mr. Chandler's authority puts beyond 
question, points to exactly the opposite conclusion. The edu- 
cated criminal is more hardened, because his fall has been 
greater; he " sinned against light,'' and that light of his intelli- 
gence was one of the deterrent forces that might have held him 
back. The more and the stronger those forces, the greater the 
fall, and the more hardening its effect upon the character. Con- 
science, however, until enlightened by intelligence, is a mere 
spur, and not a true guide in life. It has been, when un- 
enlightened, the source of a great multitude of crimes against 
humanity. There are, indeed, cases in which education has been 
80 abstractly intellectual, so devoid of all moral drift and tone. 



THE MEANING OF NATIONAL EDUCATION. 375 

that the conscience has been almost suppressed. But education 
may easily be made, or rather can hardly help being made, very 
different from that, — can never be truly national, truly in ac- 
cordance with the very first notion of the state, without being 
very diflferent. 

§ 321. Without discussing in detail the merits and defects of 
our present systems, we shall seek to discover what idea is 
rightly conveyed by the term national education. This term 
carries us back to the idea of the state as the institution of 
rights, and as distinguishable into three departments of national 
activity, — the jural estate, the culture state and the industrial 
state. Manifestly the second of these now engrosses attention, 
whereas we hitherto have been chiefly considering the third, A 
natiaual education, then, is (1) one that develops in the man the 
intellectual powers and capacities that fit him to understand the 
ideas and the truths that are the common possession of his fel- 
low-citizens, and that fits him to act with at least that degree of 
mental freedom that his nation has attained. (2) It is one that 
impresses upon him the characteristics of an upright and good 
citizen, a man of public spirit, and a devoted patriot, and that 
fits him to exercise such political powers as are intrusted to him 
by the constitution of his country. (3) It is one that gives him 
such general instruction, and ofi'ers him the opportunity to ac- 
quire such special training, as will fit him for his special profes- 
sion, calling or industry, and will enable him to pursue it in the 
most eifective manner. 

§ 322. Firstly^ education to fit a man for his position in the 
culture state will have reference to the rank in knowledge, in- 
sight and mental power possessed by his own nation. The pub- 
lic schools of China or Japan should not give lessons in German 
philosophy, or in the English language, or any language but 
their own. Even the intellectual growth of a nation is chiefly 
from within, and the attempt to import a foreign culture by 
wholesale, can only result in crushing out that which is of native 
growth, and in retarding the normal progress of the people. 
It will merely root out the native plants, and substitute a hortits 



376 SOCIAL SCIENCE AND NATIONAL ECONOMY. 

SICCUS of dry and dead specimens, without sap or root. For every 
country possesses a certain average of intelligence, and has at- 
tained a certain stage in the great historical march of the human 
spirit from childish subjection to manly freedom. And as the 
nature of that march is governed by the historical constitution 
and course of nature, each country must take the next step for- 
ward before it can take any subsequent step, — must start from 
the position that it now occupies, and build upon the foundation 
that it has already laid. 

Mr. Palgrave, the English art critic, for instance, expressed his feara 
that Japanese art will be stopped in its natural course of development, 
through the imitation of foreign models. 

The language and literature of each country are at once the 
perfect expression of the degree and quality of its culture, and 
the means of education in conformity with that. The sure 
foundation of all national education, on its national side, is the 
study of the native speech, through books that record it in its 
highest and purest forms. But text-books that give only the 
result of such studies, and teach nothing of their method, such 
as spelling books, school dictionaries, grammars, manuals of 
etymology, and the like, are not educational instruments in any 
true sense. Theyimpart information, without imparting discipline; 
they give no impulse, save in a very few cases, to the further pur- 
suit of the same studies, but rather weary and disgust the student. 
They do not render the service that all rightly directed study of 
a language through its literature will render, in training the 
judgment to decide between greater and lesser probabilities, by 
the problems it presents as to the meaning and connection of 
words. They give rather a phantasm of knowledge about words, 
a mass of definitions and statements, than an actual acquaintance 
with words in their living uses. They are more likely to hide 
from the student than to declare to him the wonder and beauty 
of the language, as a work of art at once human and divine, as 
the result of a great process of education, by which men were 
led on from the sense perception of things material, to the appre- 
hension of the more real and less tangible verities of life. 



THE NATIONAL LANGUAGE IN EDUCATION. 377 

The study of another than the native language, especially of 
a language of the same family but of earlier date, gives a great ad- 
vantage, in enabling the student to compare and contrast the two, 
and suggests to him open secrets that would otherwise have es- 
caped him. Hence the great use made of Greek and Latin in the 
higher education, one of which gives the most perfect illustration 
of the living force of words, the other of the laws of their govern- 
ment, and both correspond to earlier stages in the world's intellec- 
tual development. Both have been subjected to an analysis by 
great scholars that has extended over centuries, and are therefore 
provided with an apparatus of study the most complete possible. 

But these studies cannot be introduced into our public schools 
generally, chiefly because their curriculum of study is not pro- 
tracted to years in which these could be effectively pursued. 
The best substitute attainable in those schools, is that of our 
own language in its earlier stages, as presented, let us say, by the 
great English classics from Chaucer to Milton. That literature 
is as much the heritage of the American as of the English people ; 
while un-American elements may be traced in all the great 
writers of the following centuries, those earlier masters are free 
from them. And they furnish a long series of noble books, 
which embalm the wisdom and the excellence of lives not less 
noble. With wise guidance, and not too elaborate an apparatus for 
their study, the scholar might learn from them at once the method 
of studying words and their history, and the personal friendship 
for great authors, which constitutes a large part of the truest cul- 
ture. But mere volumes of extracts, however excellent for some 
purposes, will not answer here ; they prevent the study of literary 
works as artistic wholes ; they do not ordinarily give a full ex- 
hibit of the state of the language at any one era ; and they cul- 
tivate the habit of dipping into books rather than continuous 
reading. 

There is another language, not national but universal, address- 
ing itself not to the understanding but the heart of man — touch- 
ing fibres of his human nature too fine to vibrate to ordinary 
language, — fibres that lie closer to his very self and deeper than 



378 SOCIAL SCIENCE AND NATIONAL ECONOMY. 

his ordinary self. Music should, in the opinion of Plato and 
Milton, form a part of human education ; and the general sense 
of mankind has assigned it a very large place in the great up- 
lifting process which we call civilization. The hold which it 
has taken upon the working classes in our own days, especially 
in England, its power to elevate and refine, to harmonize and 
humanize, to remind men of the ideal to which all worthy life 
is ever striving, to cheer them with far-off glimpses of it amid 
the sordidness of the actual, all confirm this high estimate of the 
human use and worth of music as an educating force. What- 
ever danger there may be in an excessive devotion to it, it 
should be made a subject of universal training, and its introduc- 
tion into our public schools, though something late, is a most 
excellent revival of what was once a study practised in every 
school. 

Ilathematical science, in contrast to language, represents the 
most general form of intellectual culture ) it calls forth and disci- 
plines the reason, the universal intellectual power, which belongs 
to man as man, and apprehends not probabilities but certain and 
unquestionable truth. Arithmetic, geometry, algebra, have in 
modern times held a high place in education. In our schools 
arithmetic is not taught thoroughly, because after a slight amount 
of instruction in the pure science, the student's attention is 
diverted to its application to commercial computations. A more 
thorough discipline in the analysis of number would be of far 
more use even in practical life than these rules and methods, 
which are mostly obsolete in our counting-houses. Geometry, for 
the same reason that too much heed is given to what is thought 
practical, is either entirely omitted, or is postponed till after the 
student has mastered the more difficult subject of algebra. 

^h.Q physical sciences are a means of education only when pur- 
sued in such a way as to teach their methods as well as their 
results. The latter may be imparted as information in very 
large quantities without the student's having attained any real 
acquaintance with the facts ; he may have got no more than a 
mass of memorized definitions and statements, and, in spite of 



EARTH-LORE AND NEIGHBORHOOD-LORE. 379 

Bacon and all who have followed him, may mistake these for the 
facts. He may have learnt not a whit of the patience, self- 
distrust, humility, and loyalty to fact, that characterize the true 
man of science, the original investigator. His powers of attention, 
observation and accuracy may have been left dormant under it 
all. 

These objections hold with great force against the branch of 
physical science most taught in our schools, and the method by 
which it is taught. From the lowest to the highest schools, and 
by a series of graded text-books, the attention of the pupil is 
concentrated upon geography^ with no result save the overloading 
the memory with a mass of statements which constitute no real 
knowledge of the earth's surface. They are true in detail, but 
the whole is false as professing to be an adequate account of our 
planet. They are a hindrance, therefore, to real knowledge, as 
they render the student content with what is a mere phantasm 
knowledge. He mostly learns them by heart without any reali- 
zing sense of their meaning, and a question out of the usual run 
of questions often displays the vacuity of his mind on the 
subject. 

For this earth-lore it would be well to substitute neighborhood- 
lore — or the study of those facts that actually fall under the 
scholar's observation, and their scientific explanation. The 
student might learn the geology of his native district ; its rela- 
tion to all the large geographical facts, such as the isothermal 
lines, the continental formations, the sea and the tides ; its 
meteorology especially, its weather-lore ; its natural history in all 
its branches, with incitement to collect specimens for the school 
museums; its social history and progress from the days of the 
red man's wigwam to the present time. Such a training would be 
in the line of the providential purpose which ordinarily connects 
each single life with a single spot of earth ; it would give the 
mind the sense of a hold upon the world, a definite place and 
starting-point. It would be more likely, by connecting life with 
knowledge, to be the first stage in a life devoted to knowledge, 
than if its youth had been spent in loading the memory with 



380 SOCIAL SCIENCE AND NATIONAL ECONOMY. 

notions, which, however real in the knowledge of the scientist 
possess no reality for the scholar. 

And to come still more close to the student, he should be 
taught the elements of practical hygiene in connection with the 
broader physiological laws that govern health and disease. There 
are few of us but would live longer and more healthfully for 
such self-knowledge ; it would save men from grave mistakes such 
as often embitter a lifetime by disease, and would thereby add 
greatly to the industrial power of the nation. 

§ 323. Secondly, to fit a man for his place in the jural state, 
education will implant in his mind the convictions of righteous- 
ness, of justice, that underlie the national order and the laws by 
which it is prescribed and enforced. The state is the organiza- 
tion of the whole people for the purpose of securing justice; 
this is the common vocation of all states, and except as they 
recognise it and act on it, they are unworthy of the name and 
forfeit the rights of nations. The elevation of the individual 
citizen into the true national consciousness is therefore an edu- 
cation in righteousness, in uprightness, — and the means of re- 
straint upon unrighteousness, prohibitions and punishments, are 
but secondary political agencies. The state must seek first of 
all to plant the right seed, and secondarily to root out the tares. 

This is, thus far, only incidentally attempted in our modern 
system, through the influence of school discipline, the enforce- 
ment of order, and the operation upon the mind of studies that 
aim at other ends, but do effect something towards this end, by 
familiarizing the mind with the conception of law as the under- 
lying principle in every sphere of life and observation. And 
indeed it is by indirect teaching, rather than by the imparting 
of moral information, that most can be effected. The study of 
the lives of great and good men may do much ; such as those 
biographies in which Plutarch has preserved for us the life and 
spirit of the great heroes of the Greek and Roman world. And 
out of biographies already at hand, a corresponding book might 
be compiled for the modern period and written with the same 
" universal sympathy with genius " (Emerson), in the same spirit 



THE OLD TESTAMENT IN EDUCATION. 381 

of genuine enthusiasm and admiration, and convey the same in- 
spiration of enthusiasm to its students. Both in its selection 
and its method, it should contemplate men in the relation of 
their lives to the life of the state, showing how their virtues 
contributed to its strength and its freedom, and even how their 
vices, faults and weaknesses tended to weaken and enslave it. 
It should be, like Plutarch's, a book '' crammed with life," with 
" genial facility " of style, the embalming of noble lives. It 
should stand higher than his, as modern society stands above 
ancient, in the clearer knowledge that "righteousness is of the 
essence of the state " (Plato), and in the firmer purpose to edu- 
cate students into that devotion to it which is the truest and 
highest form of the national consciousness. 

The best text-books for this training are wisely written histo- 
ries, and of these the finest is the Old Testament history of the 
Jewish nation, which is especially fitted to exemplify the 
great principle that is to be here inculcated, — that the divine 
call laid upon every nation is a call to righteousness. The 
national literature of that people tells how a family became 
a tribe, a cluster of tribes, a nation j that the law of righteous- 
ness was disclosed to them as the foundation of their national 
life; that their experiences, both light and dark, disclosed to 
them the truth that they were a strong, united and living people 
when they lived by it, but weak, divided and dying when they 
lost sight of it. Especially the prophets of the nation stand out 
prominently as the interpreters of the meaning of their natio-n's 
history, — as pointing out the moral order, the moral " constitu- 
tion and course of nature," upon which the nation's life, free- 
dom and prosperity depended. Their function was not specially 
" the prediction of future events ;" some of their books contain 
no predictions whatever, and those that occur in others for the 
most part flow naturally from that perception of " the laws that 
circle under the outer shell and skin of daily life," — laws at once 
ethical and social — which they were trained to observe in '' the 
schools of the prophets." Their power of prediction was but 



382 SOCIAL SCIENCE AND NATIONAL ECONOMY. 

the test of the reality of their science of the moral order of 
society, as of all other science (§ 2). 

The Old Testament has heen so overlaid with allegorizing, "edifying,* 
and other unhistorieal sorts of commentaries, that its political significance 
has been obscured. One of the best expositions of its political side is 
given in Prof. F. D. Maurice's Prophets and Kings of the Old Testament, 
(Am. ed., Boston, 1854), In the same spirit Sir Edward Strachey has 
treated the prophecies of Isaiah in his Ilehreio Politics in the Times of 
Sargnn and Sennacherib, (2d ed., London, 1874), and Matthew Arnold 
has published the last twenty-six chapters of that hookas a text-book for 
schools {The Great Prophecy of Israel's Restoration). 

The most instructive history of any modern nation will be the 
one that most closely approaches to that Hebrew method of his- 
toriography, — not by any affectation of style or the lifeless repeti- 
tion of Bible phrases, but by the application of the same princi- 
ples in the selection of the representative facts, and in its severe 
and faithful, though friendly, judgments of all national trans- 
actions. It will start from essentially the same conception of 
the nature and the calling of the nation, and will trace the same 
divine hand "shaping'' men's " ends'' for purposes that they 
had not foreseen. It will give a lasting importance, an inex- 
haustible significance to the transactions of temporal affairs, by 
connecting them with the eternal principles of right. It will 
'make the student feel that his calling, as a member of a nation, 
is a lofty and solemn thing, and will awake him not only to the 
consciousness, but also to the conscience of freedom. It will 
show him that the privileges and franchises of citizenship are a 
divine trust, a stewardship, and his abuse of them a crime of a 
very high nature. 

It will not be claimed that- our present school histories are 
written on any such plan as this. They have been, for the most 
part, modelled more after the Fourth of July oration than the 
Hebrew prophets. They teach too often the silly vanity of 
national boastfulness, instead of any mere ethical lesson. As 
the sense of humor has been developed among us, such teaching 
and such speech-making have turned our brief but honorable 
history into a theme of jest and popular merriment, which no 



CHRISTIAN EDUCATION. 383 

longer excites the imagination or rouses patriotic enthusiasm. 
Our educated chesses now seek in other lands the scenes of 
historic association which they no longer find at home. 

§ 324. The mere instruction in righteousness is not in itself 
suJBBcient for the formation of a human character according to 
the standard of our own country. The legal maxim, Svmmum 
Jus, summa injuria^ has its truth in this connection ; the merely 
righteous man, the just man whose justice is a hard insisting on 
all his rights, an exacting of his own, comes short of perfect 
lightness or righteousness, and is often guilty of acts which the 
popular conscience pronounces to be simply wrong, though not 
technically so. This is so because we are, however imperfectly, 
a Christian nation, — because the national standard of character 
is derived from the Sermon on the Mount as well as from the 
Ten Commandments. That Sermon does not set aside the old 
code ; it only complements it by enjoining upon the individual 
heart and conscience a spirit of meekness, of self-sacrifice, and 
of forgiveness, which counteracts the spirit of self-assertion and 
hard legalism, which would bring the law itself into contempt by 
making it the instrument of men's selfishness and rapacity. The 
old basis of national order, the stern righteousness that demands 
" an eye for an eye, and a tooth for a tooth,'' it leaves un- 
touched ; but it guards that order against a peril involved in its 
own nature as applied to the affairs of imperfect men. And it 
announces those injunctions, not as applicable to some special 
class of saintly characters, but as laws of the kingdom of God — 
of God's government of men. 

The New Testament, therefore, either in or out of the public 
schools, should form an essential part of the education of the 
young for their places as members of a Christian nation. Its 
exclusion from those schools, even if it be taught sufficiently 
elsewhere, may have the effect of sundering its lessons from his 
practical life, and lead him to suppose that the book is a mere 
''religious" or churchly text-book, whose precepts of Christian 
courtesy, forbearance and self-sacrifice, concern but slightly 
his relations to society at large. The chief objections to its in- 



381 SOCIAL SCIENCE AND NATIONAL ECONOMY. 

troduction are, we believe, based on misconceptions of its real 
character, many of which are due to those who have come to be 
regarded as its especial'custodians and interpreters. 

Even as a literary work, the English Bible holds such a place 
as a master-piece that no course of education can be complete 
if it exclude it. Its phrases have become the proverbs and 
household words of the people ; ignorance of the broad outlines 
of its history and teachings, even of the letter of some especial 
parts, consigns a man to social contempt. And it has become 
entwined with all the other classical literature of the language. 
Not only Milton, Bunyan and Cowper, but even Shakespeare, 
Scott and Byron would be in places unintelligible to those who 
have no acquaintance with it. For this reason, among others, the 
Hindoos prefer to study English in the missionary schools where 
it is read, rather than in the government schools from which it is 
excluded. They also resent its exclusion from the latter as a 
piece of jealousy similar to that with which they once kept the 
Vedas from the knowledge of Europeans. 

A Roman Catholie writer, the late Father F. W. Faber, says of the Eng- 
lish Bible : " Who will say that the uncommon beauty and marvellous 
English of the Protestant Bible is not one of the great strongholds of 
heresy in this country ? It lives on the ear like a music that can never 
be forgotten, like the sound of church-bells, which the convert hardly 
knows how he can forego. Its felicities often seem to be almost things 
rather than mere words. It is part of the national mind, the anchor of 
the national seriousness. Nay, it is worshipped with a positive idolatry, 
in extenuation of whose grotesque fanaticism its intrinsic beauty pleads 
availingly with the man of letters and the scholar. The memory of the 
dead passes into it. The potent traditions of childhood are stereotyped 
in its verses. The power of all the griefs and trials of a man is hidden 
beneath its words. It is the representative of his best moments, and all 
that there has been about him of soft, and gentle, and pure, and penitent, 
and good, speaks to him for ever out of his English Bible. It is his sacred 
thing, which doubt has never dimmed and controversy never soiled. It 
has been to him all along as the silent but intelligible voice of his guardian 
angel ; and in the length and breadth of the land there is not a Protestant 
with one spark of religiousness about him, whose spiritual biography is 
not in his Protestant Bible" (Preface to Life of St. Francis of Asaisi, 
1S53). 

§ 325. Thirdly, The state should give in its public schools 



AGRICULTURAL EDUCATION. 385 

Buch general instruction, and should offer in special technical 
schools such opportunity of special and technical teaching, as 
will fit its members for their places in the industrial state. 

How far this should include the training of the members of 
the learned professions, including teachers in public schools, we 
will not stop to inquire. We will confine ourselves to the edu- 
cation of the persons engaged in the two productive industries, 
a2;riculture and manufacturinor. 

A scientific agriculture is one of the last attainments of even 
enlightened and progressive nations. As we have seen, nations 
that have made rapid advances in all the other arts, lag behind 
in this, importing food for large numbers of their people from 
abroad, when they could easily have raised enough and to spare 
at home. In some cases this is partly the effect of a bad system 
of land tenure, but in all cases' the defective intelligence and the 
superannuated methods employed in farming are chiefly to blame. 
Since Liebig's great discoveries in agricultural chemistry, it has 
become perfectly possible greatly to increase the yield of any 
given area of soil by scientific methods, and to bring under profita- 
ble cultivation the most unpromising lands, wherever the local 
market for food makes it worth while to employ those methods. 
But even in such situations as this, the farming class cling to old 
ways, refuse to employ the same foresight and enterprise as are 
essential to success in manufacturing, and jest at " book farmers " 
as a set of enthusiasts. Nor are they so much to blame ; their 
comparatively isolated situation, their distance from the great 
centres of intelligence, and the imperfections of their daily edu- 
cation by contact with other minds, render them a very con- 
servative class. They cling to old traditions with great tenacity. 
Two bad consequences result. (1) A divorce of experience 
and enterprise. The experimental" farming of the country is 
left to editors, lawyers, clergymen, and the like, who have far 
less practical knowledge than is needed for the undertaking. 
Their enterprises very often — but by no means always — are need- 
less failures; i. e. they might have been brilliant successes in 

the hands of men who united a large intelligence with a large 
25 



386 SOCIAL SCIENCE AND NATIONAL ECONOMY. 

experience. (2) The young people, who grow up on the farm, 
learn to regard agriculture as a soulless, mindless routine of hard 
work, with no chances of using any higher power than the 
muscles. They carry their brains to the best market. Some 
become preachers, others politicians, others professional men, 
others merchants. All these lines of activity are crowded with 
men of more or less intelligence and mental power, who began 
life in a farm-house, and might have been more successful and 
useful in life had sufl&cient inducements been offered them to 
end it there. 

The technical education of the farming class should begin 
in the public schools, and with the earliest years of study. The 
neighborhood-knowledge proposed above would form a good 
introduction to it. In country schools that teaching should take 
this direction. The useful branches of natural history, the 
nature, history and habits of the domestic animals, and of the 
cultivated vegetables and the agricultural geology of the district, 
should be among its themes. The child should be taught at 
once the rightful respect for his father's mode of life as concerned 
with the most valuable of human sciences, and also to thirst for 
a more extensive acquaintance with those sciences, as bearing on 
that occupation. In a word, the school should be, on this side 
of its life, the preparation for the agricultural college. 

In the college the students should receive at once the liberal 
culture that will fit them to associate on terms of equality with 
educated men, and the special scientific and technical training, 
that will enable them to practise a scientific agriculture. Of 
course the college should be, at the same time, a farm, sufficient 
in its extent and its variety of soil and of situation to represent 
the lands upon which its pupils are to be employed. Study and 
work should be associated in its management, — each to give 
direction, dignity and practical worth to the other. The best 
stock, the most improved instruments, the most thorough methods 
of tillage, should be exemplified on the farm ; and a system of 
experimental agriculture should be carried on as part of its 
activities. Above all, the pupils should be impressed with a 



THE DEPARTxMENT OF AGRICULTURE. 387 

sense of* a vocation, firstly as farmers, and secondly as farmers 
of education — as therefore in some degree intrusted with the 
education of their class. And no pains should be spared to 
impress upon the farming class the importance of such a patron- 
age of the institution, as will make it a power to promote intelli- 
gence and enterprise in the community. 

Farmers should be incited by state and county fairs, agricul- 
tural institutes and associations, and the like, to meet periodi- 
cally to compare past results and devise better methods for the 
future. Their occupation gives them leisure enough for the 
purpose at some seasons of the year. In such meetings tho- 
roughly educated farmers would soon hold a prominent place, 
and become themselves the educators of others. The influence 
of the technical school of agriculture would be thus multiplied, 
and would leaven the whole mass. 

The order of the Grangers, or Patrons of Husbandry, recently organized 
in this country some years ago, and already very widely extended, 
promises very excellent results in this direction of mutual education, pro- 
vided that its constitution be rigidly adhered to, and the undertaking be 
perseveringly sustained. But mere association will not work immediate 
wonders, nor change at once the material thus united, and there seems to 
be danger of the order being used for political purposes by ambitious 
men, or smothered under the meaningless mummery of a secret association. 

A governmental department of agriculture may render great 
services to the farming class, not only by the collection and accli- 
matization of foreign plants, seeds and animals, and their distri- 
bution at government expense ; but also by investigating through 
consuls, and special agents, the methods of foreign agriculture, 
and by undertaking investigations and publishing information 
which private publishers would find too expensive. There are 
very clear limits to the range of its educational activities, but 
within those limits there is much that can bo done to great 
advantaire. 

§ 326. Of hardly less importance is the technical education of 
the other classes engaged in productive industry. The era of 
the application of science to manufacturing industry maybe said 
to have begun with Napoleon and the Continental system, when 



388 SOCIAL SCIENCE AND NATIONAL ECONOMY. 

upon the French and German savans was imposed the task of 
discovering substitutes for substances which could no longer be 
obtained from abroad. Up to that time the arts had taken the 
lead of the sciences; Watt and Arkwright rather furnished 
problems for scientific investigation, than acted on the guidance 
of scientific teaching. But now science began to point out new 
industrial methods, and suggest improvements of those that were 
traditional. From the study and the laboratory came forth dis- 
coveries that revolutionized the workshop. Every prooressive 
and intelligent nation is emulating every other in their adoption, 
and changes continually occur in great industries, by which 
old methods are at once abandoned and new substituted. Work- 
inguien of a low and unintelligent grade have not the power of 
adaptation needed in those who are thus giving up old traditions 
and adopting new ways. The onward march of the industrial army 
will be greatly hindered if its troops have not the drill and the 
mental equipment that fit them for it. And that equipment is 
twofold. The man must have received such general training as 
has developed his judgment and his powers of observation, and 
must have a large measure of specific knowledge as to the nature 
of his work, and the materials he deals with. 

So rapid are these changes, that there are, for instance, sugar refine- 
ries in our own country, full of machinery which is far from being worn 
out, but which is simply rusting out in idleness, because the discovery 
of new processes for the extraction of sugar from molasses has rendered 
it useless. The owners could not afford to go on using it, and will finally 
sell it as old iron. 

§ 327. The complexity of modern manufacturing, even if it 
were thoroughly unprogressive, makes such technical training 
highly desirable. Things are attempted in modern industry that 
would once have been voted impossible, and the people who can 
do the most of these impossible things takes the industrial lead 
of all others. The resources of the old workshop were as limited 
in kind as in extent; its workmen plodded on in a dull routine 
that demanded little more than a slight cultivation of hand and 
eye. But a walk through a modern watch factory, will show what 
a vast number of technical educations have been expended upon 



THE INDUSTRIAL EXHIBITIONS. 389 

the several workmen, and to what thoroughness these have been 
carried in each case. It is true that training of this sort is 
chiefly the work of active life, and can never be obtained tho- 
roughly in any other way. But it is also true that very much 
may be done indirectly to qualify the man for his work ; much 
knowledge may be given him that practice will transform into 
technical expertness. And above all, by showing him the rea- 
son of his work, as well as its method, is he not only qualified 
to act intelligently in any unforeseen circumstances, or to apply 
the same principles in any new method, but he is also led to take 
a deeper interest in his work, and to do it with more diligence, 
— more love for it. 

And all this applies with tenfold force to the foremen of the 
workshop, the non-commissioned officers of industry. They 
hold a place to which every workman should be taught to look 
forward as the end of his labors, — as a place of honor as well as 
of better remuneration. And they should be men who know 
the "why" as well as the ''how" of every industrial process 
that goes on under their oversight, for no knowledge short of 
that will enable them to meet all contingencies. 

The great industrial exhibitions, which began with that of 
London in 1851, have opened a new era in technical education. 
The Continental nations, taught by the display then made of the 
great staples of English manufacture, especially metals, turned 
their attention to the diffusion at home of such technical know- 
ledge as would fit their workmen to produce the more elaborate 
and costly of these, — those sorts, that is, in which the value is 
chiefly in the workmanship expended, and not in the raw ma- 
terial, much of the latter being imported from England. The 
results were visible in the Paris exhibitions of 1855 and 1867, 
and in the second at London in 1862. Each new comparison of 
results brought new humiliation to England, and even in 1862 the 
conclusion was reached that before England courted any new com- 
parisons of this sort, she must do great things for the education 
of her workmen. But 1867 found her still farther in the rear, 



390 SOCIAL SCIENCE AND NATIONAL ECONOMY. 

and almost every competent judge of the question, who expressed 
any opinion, united in that of Prof. Tyndall, " that in virtue of 
the better education provided by Continental nations, England 
must one day, and that no distant one, find herself outstripped 
by those nations, both in the arts of peace and war." This 
opinion, which is widely shared by patriotic Englishmen, will 
mislead us if we ignore the existence of other elements of Eng- 
land's commercial greatness, English competition has destroyed 
the muslin manufactures of Dacca, and the carpet manufactures 
of Turkey, in spite of the superiority of those wares to anything 
of the same sort that she herself produces. But as intelligence 
and taste are more and more widely diffused in those who use 
as well as those who produce, superiority of workmanship be- 
comes every day a larger element of industrial power.; and Mr. 
Scott Russell is not far wrong in saying : " Should the day come 
when our manufacturers are less skilled, less informed, less able 
than our rivals, the flood of raw materials to our shores, and the 
back-current of manufactures to replace them, may take another 
direction and surge on other shores." 

See his Systematic Technical Education for the English People; Lon- 
don, 1869. 

§ 328. The technical education of the workman is especially 
required for the production of those articles which require beauty 
of form, of color, or of design, for their production, and in 
which the joy of the artist is wedded to the toil of the artisan. 
Our democratic and industrial age has indeed till recently laid 
but little stress upon the beauty of its industrial products. It 
has cared more for use and subtance, and less for beauty and 
grace. There is no real antithesis between the two ] the ele- 
gantly shaped earthenware from Greek and Roman kitchens and 
sculleries, with which we fill our museums and adorn our mantels, 
served their every-day uses of holding salt, oil, or the like, as 
well as do the ugly shapeless pieces of delft that now take their 
places, and they had cost no more for being beautiful. We have 
not had common things about us made in beautiful shapes be- 



ART EDUCATION FOR THE PEOPLE. 391 

cause we have not cared to have them, — because our minds have 
lain dormant as regards the whole matter. But during the last 
forty years there has been an ever accelerating increase in the 
appreciation and love of the beautiful, and in the hatred and 
contempt of the mechanical pretences at beauty that once con- 
tented us. Our Democracy is passing out of the Thersites stage 
into that of Pericles, and all the past history of Democracy bids 
us expect a grand era of the fine and the industrial arts, which 
have always lived the grandest life when in alliance with each 
other, and with freedom and popular government. Especially 
in our industrial age — whatever may be the future of the fine 
arts — the manufactures that approach artistic merit and ex- 
cellence may be expected to make great advances upon anything 
that the past has seen, and to bring the finest combinations of 
form and color within the reach of all who can compass even 
the necessaries of life. For this end the artisan must once 
more become the artist ; for all true art in every nation has been 
born in workshops which were also studios, while it has been 
pampered, corrupted and finally destroyed in the palaces of nobles 
and kings. 

The art education of the working classes becomes, therefore, 
every day of greater industrial importance. In England es- 
pecially it has made very rapid advances, since the Great Exhibi- 
tion of 1851 brought to light the general inferiority of English 
goods — especially glass and earthenware — to those of the Con- 
tinent in this respect. Art schools, especially night schools for 
workiugmen, were at once established in all the large towns, and 
instruction in art was begun in public and other schools, and the 
Dumber of pupils receiving this instruction has increased with 
great rapidity. In 1866 it was over a hundred thousand. The 
results were at once visible in the exhibition of 1862 in all 
articles that called for designing and decorative art, and in those 
that require in the workman a feeling for form or color, and 
England's great progress in this direction was confessed by Con- 
tinental observers, while her decline in some others was very 



392 SOCIAL SCIENCE AND NATIONAL ECONOMY. 

evident. The establishment of the great South Kensington 
Art-Museum is the last measure in a series which have brought 
England up from the lowest place but one to one of the very 
highest among the civilized nations that apply art to manu- 
factures. In Germany the same branch of industrial education 
has been vigorously pursued throughout our century ; and their 
general artistic training, aided by fine fancy and exquisite taste, 
has kept the French people also in advance of their insular 
neighbors. America lags far behind all these countries; with 
us artistic knowledge and culture of every sort is the privilege 
of the few, instead of being the birthright of all. We are 
beaten in that which is the peculiarity of out own country, and 
perhaps our national vocation — the transformation of such 
privileges into such birthrights. Hence a large part of oar 
work, though equally costly in material and thorough in work- 
manship, ranks below the corresponding work of Europe because 
of this defect. And what work of another sort is done amons 
us IS either by workmen or after patterns imported from Europe 
for the purpose. Nor is this a matter of indifference. A very 
considerable amount of aptitude for art lies undeveloped in this 
unpicturesque country and among this practical people, and is 
chiefly a source of annoyance and torment to the teacher as it 
finds vent in all sorts of irregular ways, whereas it might be 
made a delight and a benefit. And were our designers and 
masters of ornamental art native to the soil, their work would 
be far better adapted to American tastes, far more a source of 
pleasure and instruction to the people than that which is pro- 
duced by foreigners in Europe, or after their naturalization 
among us. It would be the outgrowth of the national spirit, 
and would react far more powerfully upon the national mind in 
producing refinement and elevating thought; just as Rodgers's 
statuettes have done more for us than Thorwaldsen's Apostles 
could. A truly national school of art would then become 
possible to us, for our schools of design would serve to winnow 
out the really artistic minds from among the common people, and 



TRUE AND FALSE ARCHITECTURE. 393 

give them a sense of the worth of their vocation in its relation 

to the national life. 

The perfect adaptation of wares to the national tastes is in itself a 
measure of protection to the native manufacturer. An English dry 
goods firm sent out instructions to its agent in China, to pick up well- 
dressed Chinamen of different classes on the street, and buy their clothess 
off their backs, and send these at once to England. From these sam- 
ples it could produce goods of the very sort that the Chinese 
wanted. In other cases the traditional costumes of European peasants 
were procured and imitated by English firms, with great success. But 
in a progressive society where a really cultivated, and at the same time 
distinctively natural taste exists, and where the change of fashions 
prevents a dead uniformity and monotony, such an imitation would be 
impossible. 

§ 329. Students of the great building eras of the past, those 
that produced the temples of classic Greece and the cathedrals 
of mediaeval Europe, will never be equalled until the distinction 
between the function of the architect and that of his workmen 
is obliterated by raising the latter more nearly to the level of 
the former. This is a subject of great importance to a young 
country like the United States, which is putting hundreds of 
millions into public and private buildings every year, and ex- 
pects these to last for centuries. The advance of popular taste, 
such as it is, has already shown us that nothing is so costly or 
so wasteful as ugly architecture. A mechanical lifeless copy or 
half-copy of a Doric temple or an Italian palace, or a still uglier, 
more barn-like building, may please the people who built it and 
be not offensive to their neighbors and contemporaries. But the 
human mind wages ceaseless war on ugliness, detecting it in- 
stinctively, becoming more sensitive to it with every advance in 
culture, and finally abolishing it as an eye-sore and a nuisance. 
All work that is not the best of its kind comes into collision 
with this subtle, levelling force, which is stronger than mortar 
and brick, or stone and cement 

The mere spread of culture and taste among our professional 
architects will only half solve the problem. "We have had no 
real architecture — Mr. Ferguson, the very highest authority, 
tells us — because our artisans have not been artists also, as all 



394 SOCIAL SCIENCE AND NATIONAL ECONOMY. 

the Greek and mediaeval stone-masons were; and we shall only 
go on wastefullj — building in one generation what the next 
will overthrow — till we get back to that point. This is surely 
the largest problem in the technical education of the working 
classes ; but, after, all, it is only an extreme case, for the same 
principle is applicable in every other department. Artistic 
beauty is the crown and the flower of all the reproductive work 
of man ; and to make the artisan an artist — to add the joy of 
beauty to the strength of toil, is a problem that meets us on 
every side of industrial life. Only this will lift the life of the 
workman out of its sordid wearisomeness, and make it tolerable 
by making it noble. 

§ 330. The industrial education of the people should be con- 
templated in the common school system, as well as in the special 
technical schools. The school-room itself should be an educa- 
tion in the feeling for and love of the beautiful. Communities 
and artists should discern that there is no higher use for the 
best artistic faculty that the community possesses. And while 
there should be a general training in drawing for all scholars, 
there should be a special winnowing process for the selection, 
with a view to the further training, of those who are especially 
gifted by nature with the artist's eye and hand. 

And the neighborhood knowledge proposed above should, 
especially in our cities, take in the great local industries, their 
histories, their growth and their methods, and whatever else is 
suited to awaken an intelligent interest in the student's mind, 
and lead him to look on with observant eyes at the work that is 
going on around him. 

But technical schools for the special training of actual work- 
ingmen must be the chief dependence in this respect. There is 
nothing new in the attempt to combine learning and working in 
the same life. It was once the rule in the history of educa- 
tion, while juvenile education, down to the era of the Reforma- 
tion, was the exception. The two pursuits are not in each 
other's way; each may give new zest and interest to the other. 
Nor need the workingman's studies be confined to branches 



LEARNING AND AVORKINQ. 395 

which will be of direct and practical use in his work. The ex- 
periment of the Workingmen's Colleges in England shows that 
this class arc fully able to receive and to appreciate what is, in 
all essential respects, a liberal education, and that not with the 
view of leaving their own class to enter what is socially construed 
as a higher, but to remain in it as its educators and leaders — 
an ideal depicted by our greatest novelist in her Felix Holt. 

The general education of the working classes in all those 
branches of learning which will directly conduce to their industrial 
eflSciency, is the natural complement of that protective policy 
which has already been advocated. That the nation should 
take any steps in this direction is very consistently denied by a 
very few free traders like Prof. Thorold Rogers, but in Eng- 
land common sense has always counted for more than logic, 
and very large outlays of national funds, as we have seen, have 
been made with a view to this end. She has gone far beyond 
our own country, although she has not yet overtaken the con- 
sistently protectionist peoples on the Continent, who are, both by 
restrictions on trade and by the schools of the state, training their 
people to compete with her. We have clung to the former but 
neglected the latter, and while there have been great advances 
made in the character of our manufactures, we must again pro- 
nounce the results to be unsatisfactory and insufficient. We 
can do, we must do, greater things than we have ever attempted. 

It is beyond the province and the powers of the present writer to dis- 
cuss the details of the problem. He knows only what he has had at 
second hand from friends sind from books — especially he would refer for 
details to Mr. Scott Russell's Systematic Technical Education of the Eng- 
ItHh People, and Mr. T. Twining's Technical Training, London, 1874. 



INDEX. 



Ad valorem duties, defined, 231-2. Their effect in 1846-54, 355-6. 

Agriculture, Quesnay's view of, 18. Adam Smith's, 19. A fundamental in- 
dustry, 40, 90-1. Its historic beginnings, 49-50, 69, 197. Its progress, 
70-2, 113-4. Intensive and extensive, 71-2, 237. Benefited by the neigh- 
borhood of other industries, 40, 46-7, 90-3, 212-7, 223, 235-6, 241-5, 259, 
263, 276, 291-3, 305, 311, 320, 327, 342, 352-3. Needs intelligence and 
education, 83, 365, 385-7. In Germany, 72-3, 88-9, 122, 171-2, 323, 327. 
In Italy, 48, 73, 90, 121. In England, 58-9, 74-83, 97, 122-3, 124, 129-30, 
130-1, 212-4, 259. In Belgium, 57, 72, 87-8, 171, 236, 319-20. In France, 
86-7, 97-8, 123, 171, 273. In Switzerland, 58, 89. In Spain, 73. In 
Russia, 89-90, 124. In Scandinavia, 89, 113, 332. In America, 60, 92-3, 
109-113, 172, 215, 239-44, 263, 341-2, 343, 348, 350, 357, 385-7. 

Alcavala, a Spanish tax, 183. 

Alcohol, its use a survival, 66. The heaviest tax on the working class, 131-2. 
Taxes on it, 183, 184. In India, 314-5. In England, 302. 

Alleghenies, their settlement. 111. 

Annuities, perpetual, 191-2. Terminable, 192. 

Apprentices, limited by Trades' Unions, 135. 

Arbitration between capital and labor, 136, 139. 

Architecture, true and false, 393-4. 

Argyle, Duke of, 108. 

Aristocracy, its origin, 32-3. Its decay, 64. Loss of power in England, 
282-3. 

Aristotle, 14, 15, 32. 

Arkwright, 128, 220, 281, 388. 

Art in relation to science, 11, 14-15, 23, 24, 267. 

Arts, use of gold and silver in, 145. Fine art in Japan, 376. In industrial 
education, 390-4. 

''Arts, the seven liberal," 369. 

Ashburton, Lord, 156, 166. 

Association, man's progress to and by, 29, 32-6, 40, 49, 50, 70, 142, 143, 154, 
197, 216-7, 220-1. Its decline, 217, 223, 30J-2, 311-2, 334, 337-8,341. 
Earliest forms, 32-3, 73-4, 98, 219. Of labor and capital, 115, 123, 135-6, 
138-9, 254. Of workingmen, 25, 133-5, 136-8, 139-40, 202-3. 

397 



398 INDEX. 

Atmosphere, the great storehouse, 43-5. 

Babbage, 138. 

Balance of trade, mercantile theory of, 16, 209. Say on, 20, 21, 207. Tooke, 
23-4, 207. Its relative importance, 151-2, 206-8. Between England and 
Portugal, 334, 336. Between England and America, 343, 356. (See Pas- 
sivity of Money.) 

Bank-notes, first issued at Genoa, 153. Then in England, 153-4, 162-3. 
Their uses, 154-5, 169-70. ''Over-issues," 156, 165,173,175. Guaran- 
tees, 155-6. 

Banks, their rise, 153, 157. Their services, 154-6. Their functions, 158-62. 
Freedom and safety, 155-6, 170, 175. Their impolicy, 161-2, 164, 166, 173. 
In Italy, 153, 157-8, 161, 162. In Northern Europe, 153, 157, 158, 162, 
171, 171-2. In England, 162-8. In Scotland, 168-70. In France, 170-1. 
In America, 172-8. (See Bullion, Cash Credits, Clearing-house, Credit 
System, Discounts, Money of Account, Panics.) 

"Bank-screw" in England, 166-7. 

Banks, land, 171-2. 

Banks, people's or labor, 139-40. 

Bankruptcy, forced and needless, 167, 173. France in Law's time, 170. In 
America, 350, 354, 357. 

Barter, the first form of trade, 15, 142, 152. 

Bastiat, 30, 126, 129, 266. 

Baxter, Dudley, 211-2. 

Beet sugar, 254, 272-3, 319, 322. 

Benedictine monks, 14. 

Berkeley, Bishop, 26. 

Bible quoted : Old Testament, 35, 36, 49, 68, 73, 119, 202, 221. 367. New 
Testament, 38, 39, 50, 190, 223, 368. Its place in education, 381-4. 

Bill of exchange in antiquity, 152. Reinvented by the Caursins, 152-3. Its 
nature, 153. Use in the United States, 177. 

Biography in education, 380-1. 

Black death, 74. 

Blanqui, 21, 249, 253. 

Belles, Prof., 26. 

Bowen, 193. 

Bowring, 312, 326, 328. 

Bright, John, 187, 192. 

Brougham, Henry, 348-50. 

Bullion in the Bank of England, 165-7. In that of France, 171. 

Buring, 172. 

Burke, 20, 225. 

Bushnell, Dr. Horace, 227-8, 231, 347. 

Byles, Judge, 31, 309. 

Ceesar, 214, 283. 

Cairnes, J. E., 25, 63, 149. 



INDEX. 399 

Capital defined, 115, 307-8. Its growth, 55, 237-8, 260-1. Its fair share, 
24-5, 115-6, 124-6. Restrained by boundary lines, 19. Its tyrannous 
power, 28-9, 200-1, 209, 222-.3, 281, 301. Its responsibility, 120-1. Its 
relation to improved agriculture, 72. Its policy toward labor, 119-20, 
132-9. Is benefited by varied industry, 129, 237-8, 307-8. Relative ster- 
ility when employed in foreign trade, 205-6. Should legislation change 
its direction ? 260-1. Fertilizes labor, 115, 123, 125-6, 135-6, 151-2, 154»-5, 
207-8, 274. England's accumulations, 125, 149, 151-2, 168, 209,212, 281. 
Ireland's want, 130, 307-9. Drained out of Portugal, 334. And Turkey, 
339. 

Carpets, Turkish, 336-7, 390. 

"Cash credits," in Scotland, 154-5, 169. In America, 204. 

Cattle, first form of property, 73-4, 142. Early use as money, 142, 143. 
Early British, 101, 122. Value in agriculture, 46, 72, 92, 244. 

Carey, Henry C, 29, 101, 126, 144, 294. 

Carey, Matthew, 29, 173. 

Carlyle, Thomas, 321-2. 

Caursins, invented bills of exchange, 152. 

Celibacy, its efiFects, 56, 65. In antiquity, 60-1. In America, 65. 

Census, British, 62. Irish, 62-3. American of 1870 and 1880, 358. 

Centennial Exhibition, 358-9. 

Chalmers, Dr. Thomas, 23, 55, 288. 

Chase, Salmon P., 176, 193. 

Checks on population, 54, 56, 65. 

Checks, bank, 160, 163. 

Chemistry, 11, 15, 67. Agricultural, 46, 59, 113-4, 385, 386. Industrial, 
254-5, 272, 322, 387-8. 

Chevalier, 21, 149, 249, 250, 354. 

Cicero, 152. 

City, its history, 32-3. Becomes the empire, 33. Hated by the Teutons, 33. 
The closest association, 142. Duties, 52-3. 

Civilization, its material progress, 29-30, 37-8, 40. Is normal, not excep- 
tional, 56-7. (See DifferoUiation of Function, Division of Labor, Potcer 
over Nature, Progrens.) 

Clay, Henry, 234, 351, 352-3. 

Cleanliness, its promotion by law, 52-3, 67. And temperance, 132. 

Clearing-house, anticipated in French fairs, 160. Adopted in Scotland, 160, 
169. A bank is one, 159-60. Its operations, 160. Between national 
banks, 176. National proposed, 177-8. 

Climate, changed in England, 71. Commerce between climates, 217. 

Clover, its use in farming, 45, 244. 

Coal, its origin, 44. A labor-saver, 69. Irish and English, 298. Flemish, 318. 

Cobden, 149, 187, 192, 230, 273, 288, 330, 336. 

Coins, origin and shapes, 143. Of various substances, 148. Superseded by 
money of account, 157-8. 



400 INDEX. 

Coinage, English, under Sir Isaac Newton, 163. 

Colbert, 17, 191, 209, 269-71, 273, 279. 

Coleridge, S. T., 27, 28, 38, 79-81, 201, 253. 

Colwell, Stephen, 30, 208, 356. 

Commerce, definition and origin, 197. True sense of the word, 362. Trader's 
tax on, 198-9. Neighborhood commerce, 199-200, 201-2, 216-7. Distant, 
200-1, 210. On credit, 203-5. Smith and Say's theories of foreign, 
205-9. The present English theory, 209-16. In raw materials, 214-6. 
True and false commerce, 217-8. Protection makes commerce equitable, 
245-8. French, 273, 274. English, 281, 282, 284-6. Australian, 296-7. 
Indian, 311-2, German, 328. Portuguese, 334-5. Turkish, 336-7. Amer- 
ican, 342-3, 348, 349-50, 355, 356, 357. (See Credit System, Trader.) 

" Commodities are paid for with commodities," 20, 207-8, 334. " Gold is a 
commodity like any other," 149-52, 207-8. 

Commons enclosed in Italy, 73. In England, 77-8. 

Community in land, 74, 75, 90, 98-9. 

Competition highly estimated by the English school, 19, 22, 287, 309. Its 
relation to rent, 22, 93-5, 98-9. Restricted in the land market, 96, 305-7. 
Limited by custom, 24, 74-5, 98-9, 118-9. Does not always adjust prices, 
201, 202. When does it raise wages? 129-30, 236, 303. Attempts to su- 
persede it, 25, 136-8, 202-3. Protection promotes it, 226-7, 233-4, 251-2. 
England's competition with the world, 213, 274, 281, 296-7, 301, 318, 323, 
330, 336-7, 350-1, 356. French, Belgian, German and American com- 
petition with England, 213, 233-4, 274, 284-7, 319, 328. 

"Constitution and course of nature," 12, 29, 31, 37-8, 230, 376. Illus- 
trated in the history of soil, 41-8. As regards population, 63-7. Of 
human nature in regard to wages, 119-20, 121. As regards the growth 
of varied industry, 219-21, 258-9. 

Constitution of the United States, 224^5, 265. Industrial motives to its 
adoption, 344. 

" Consumer, protection discriminates a'gainst the," 256-7, 289, 327. 

Continental currency, 172. 

"Continental system" of Napoleon, 254-5, 271-3, 281-2, 318, 323, 387-8. 

Contraction practised arbitrarily by banks, 160, 161-2, 176. In England 
in 1783-1815, and later panics, 164, 165. Necessitated by Peel's Bank 
Law, 166-7, 168. In Scotland, 170. In the United States, 173, 176, 193. 
Avoided in France, 171. 

Cooperation in production, 25, 136-8, 366. In housekeeping, 141. In trad- 
ing, 202-3. 

Copper in coinage, 148. Cheapened by protection, 261. 

Copyhold tenure of land, 74, 77. 

Coral islands, 43. 

Corners in wheat, 200. (See Forestalling.) 

" Corn Laws " repealed, 283, 284, 288. Their operation, 330, 350. 

Cosmopolitical school founded by Adam Smith, 19-20. Its disciples, 20-26. 



INDEX. 401 

Opposed by Fichte, 27. By Coleridge, 27-8. By List, 28-9. By Carey 

and his school, 29-31. Their view of nationalities, 230-1. Their theory 

of commerce, 205-218, 228-9. Of the sphere of the state, 223-8, 289. 

The expediency of protection conceded by their chief authorities, 249-51. 
Cotton, its production in America, 215-6, 240, 243, 254, 263-4, 280, 346, 350, 

351. In India, 280, 311-2. In Turkey, 337. Manufacture in England, 

215-6, 280, 284, 285, 311-2, 346. In India, 240, 255, 280, 311-3, 390. In 

Germany, 326, 328. In Russia, 330. In Portugal, 336. In Turkey, 336. 

In America, 263-4, 346, 350. Whitney's cotton-gin, 254, 281, 346. 
Credit system, 159. Objectionable, 203-5. 
Crime and education, 373-5. 
Cromwell, Oliver, 83-4, 106, 277-8. 
Culture-state, 38, 375-80. 

Custom as an economic force, 24, 74-5, 86-7, 98-9, 118-9, 140. 
Customs, in England, 187, 283-4, 290. (See Duties on Imports.) 
Cutlery manufacture in America, 210-1, 255. In England, 277. 
Dangerous classes, 76, 120. 
Dearness, artificial, 200. Caused by protection, but only temporary, 233, 

248, 251-2, 261. A relative matter, 215-6, 241-2, 257-8, 263. 
Death-rate, 61-2, 67, 303. 
Degradation, its influence on population, 67-8, 303. Efifect of low wages, 

119-20. Of English peasantry, 76, 78, 83, 95, 131, 212. Of the Hindoos, 

311-2, 314-6. Of the Turks, 337-41. 
Demesne lands, 181, 185. 
Democracy of our age, 115. Its rise in England, 288-9. Relation to art, 

391. 
Demonetization of silver, 146-8. 
Density of population an advantage, 49-50, 59-61, 68-9, 70, 96, 98, 100, 109, 

198. Its natural limits, 63-7. In diflferent countries, 57-8, 61, 87, 89, 98, 

320. 
Depopulation of the Roman Empire, 60-1, 67-8. Of places in India, 311. 

Of Ireland, 63, 130, 302-3. 
Deposits, Bank; their origin, 159-60, 175. Part of the currency, 160, 165, 

175, 176. Amount under bank's control, 161, 164, 165, 165-6, 167, 168, 

171, 173. Runs on them, 162. A substitute needed, 161, 162, 203. (See 

Discouuta, Money of Account.) 
Differentiation of function, the essence of social progress, 37-8, 40, 43, 128, 

137, 142, 144, 145, 179-80, 197-8, 203, 216-7, 219-22, 238. (See Division 

of Labor, Uniform ity.) 
Dilke, Sir Charles, 287-8, 295, 297. 
Discounts, Bank, 158, 159, 164, 165-6, 173, 203, 204. 
Disraeli, 287, 288, 303. 
Distribution, law of, on increased production in agriculture, 96-8, 122-3. 

Same in regard to labor, 124-6, 127, l?2-4, 237-8, Engligh theories of, 

21-2, 24, 54, 93-5, 116-7, 119, 133-4, 265. The existing system ques- 
26 



402 INDEX. 

tioned by Mill and other socialists, 24, 116, 264, 266. Its remediable de» 
fects, 185-40, 201-3. 

Dividends, taxes on, 183. 

Division of labor, a part of social progress, 15, 68, 70, 128, 197, 237, 345. 
Enabled by capital, 209, 237. 

Drainage, natural, of poor lands, 100, 108. Artificial, its uses^ 72, 102, 105, 
106, 109, 110, 322. 

Drunkenness, how diminished, 132, 138. (See Alcohol.) 

Dufferin, Lord, 300, 302, 303, 304, 305, 308, 309. 

Duffy, Sir Gavan, 85. 

Duhring, Dr. E., 30, 266. 

Dunbar, Prof., 26. 

Dureau de la Malle, 60. 

Duties on imports, and their incidence, 231-5, 248. On raw materials, 
239-40, 256, 346. Their object and ultimate effects, 251-2. Reme- 
dies for excessive, 361. (See Ad valo7-em, Dearnesg, Protection, Specific, 
Tariffs.) 

Earthenware, why called delf, 275. Manufacture in Germany, 328. 

Economistes, school founded by Quesnay, 17-8. Adam Smith's relation to, 
19. Divorce science from art, 29. Turgot represents, 18, 271. 

Economist (London) quoted, 284, 313. 

Economy, not always parsimony, 14-5, 119-20, 124, 211-2, 227-8, 235. 

Edinburgh Review, 124, 186-7. 

Education, Malthusian hopes from, 55, 56. Promotes longevity, 67. Pro- 
moted by good wages, 120. Diminishes drunkenness, 132. National is 
threefold, 375. (1) For culture state, 375-6. (2) For jural state, 380-4. 
(3) For industrial state, in agriculture, 384-7. In the arts, 387-95. 
State provision for, 180, 224, 229-30, 248-9, 286, 366-7, 373-4, 384-5, 
395. Neglect in England, 83, 371-2. Ancient education (Judea, Greece 
and Rome), 367-8. Mediaeval (Eastern Empire, France, Germany 
and England), 71, 369-70. Modern in Europe, 370-1. In America, 
372-5. 

Edward III., 276. 

Elder, William, 20. 

Elizabeth, Queen, 72, 83, 106, 277. 

Emerson, 110. 

Enclosures, 73, 75, 76, 77, 99. 

Equality, natural tendency to, 29, 238, 260, 265-6, 327. Hindrances to, 30, 
78, 168, 189, 201-2. 

Equilibrium of the industries, the goal of industrial growth, 27, 30, 90-3, 
212, 259. Destroyed in England, 78, 80-1, 212, 213-4, 259. Not attained 
in America, 91, 92-3, 212. 

Evening Post (New York), quoted, 236-7, 247. 

Everett, Edward, 346. 

Evictions in Scotland, 85-6. 



INDEX. 403 

Exchequer, Notes, 164. 

Excises, when first imposed, 185, Enormous growth, 186-7. Recent reduc- 
tions, 186. Revenue from, 291. (See Internal Revenue.) 
Exhaustion of the soil, 46, 243-4, 304. 
Exhibitiou of 1851, 389, 391. Of 1855, 389. Of 1862, 389, 391. Of 1867, 

389-90. Of 1876, 358-9. 
Exports, no test of prosperity, 217, 262, 362. England's most valuable, go to 
Protectionist countries, 246-7, 296-7. Does protection prevent, 262. In- 
crease and modification through protection, 273, 327, 328. 
Factory system invented by Arkwright, 128, 220, 281. Its benefits, 128, 220, 
330. Not applicable to agriculture, 81. Calls for technical training, 
388-90. 
Family, the first form of society, 14, 32, 143, 219, 381. Its surrender of in- 
dustries, 141. Extinction of old families, 64-5. 
Famine, characteristic of thinly-settled regions, 59-60. Hunter's specific 
against, 60. In antiquity, 61. In Ireland, 59-60, 62-3, 109, 302-4. In 
India, 312. 
Farmer, man's third stage as food-producer, 68, 69. History in England, 
74-8. Needs direct protection, 239-40. Benefited by variety of industry 
90-3, 214-5, 240-5, 350. Needs special training, 385-7. (See Agriculture, 
Grain Trade.) 
Farming the revenue, 189-90, 269, 

Fashions worth more than mines to France, 279. Should be national, 392-3. 
Fawcett, 131, 238-9. 
Ferrara, 30, 126. 

Fertility of soil, a great process, 42-6. May be destroyed by exhaustion or 
denudation, 46-S, 244. Of midland England, 106. Of Ireland, 107, 109, 
297. Of Southern Illinois, 112. 
Feudal system, an enemy of national unity, 34, 179, 221. Its land tenure, 
74-5, 79, 86-7, 97. Its villeinage, 74, 88-9, 122-3. Its tenures and ser- 
vices abolished in England at the Restoration, 77, 79, 186. In Prussia by 
Stein, 88-9, 122. 
Fichte, J. G., 20, 27, 221, 367. 
"Fields" of the Mark, 74, 75, 76, 197. 

Finance; bad methods of early periods, 17, 180-1, 189-90, 268-9, 271, 276. 
Moslem finance, 189, 313, 316-7, 337, 339. French policy, 170-1, 191, 
269-70, 271. German, 321, 322, 323, 324, 325, 326. English, 162-3, 183, 
185-7, 189, 190-1, 191-3, 229-30, 276, 283-4, 291. American, 176-7, 181, 
183, 184, 185, 188-9, 193-6, 227-8, 229-30, 248-9, 344-5, 347, 352-3, 354, 
357. Canadian, 290-2. East Indian, 313-7. 
Folkland, 73. (See Commons, Enclosures, Mark.) 

Food, a prime necessity, 41-2. Man's progress as its producer, 68, 70-2. 
In Greece, 115. In ancient Italy, 73, 115. In France, 97-8, 123-4, 273. 
In England, 58, 59, 71-2, 82, 83, 101-2, 122, 187, 212, 213, 241-2, 259, 277, 
302-3. In Ireland, 62-3, 109, 130, 302-3. In Belgium, 87-8, 320. In 



404 INDEX. 

America, 92-4, 112, 239, 243-4, 341-2, 348, 356. In India, 312, 314, 
315. 

Foreign commerce. (See Commerce, International Exchanges.) 

Forestalling the market, the method, 200-1. As practised in Chicago, 200. 
In Australia and California, 200, 290. 

Fortnlgiithi Review {London), 200, 226-7, 297. 

Fourier, 199. 

Franklin, Benj., 18, 65, 242-3, 342, 372. 

Frederick the Great, 171, 190, 272, 321-2. 

Free banking, 155-6. In Scotland, 169. In Rhode Island, 174—5. 

Free contract, English faith in, 19, 119, 307. Does not extend to land, 23, 
70, 96, 305-7. (See Competition, Custom, Socialists.) 

Freedom, the nation's aim, 35, 39, 376. It increases with closeness of asso- 
ciation, 68, 220-1. Declines with its decline, 221, 306, 341. Industrial 
freedom, 225-7, 306. 

Freeholders, 75. 

"Free Trade," proposed by the Economistes, 18. By Adam Smith and Say, 
19, 20, 206, 207-8, 260-1, 272. By Torrens, Eicardo, and Mill, 22-3, 
209-10. Opposed by Fichte and List, 27, 28-9. Based on the Laissez faire 
theory of the state's functions, 19, 223-6, 264-7, 287, 289, 309, 355. In- 
jurious between countries of unequal industrial status, 222-3, 301, 310-2, 
329-30, 334-5, 336-7. Means mostly the exchange of raw materials for 
manufactured goods, 212-3,214-6, 246-7, 263, 280, 291, 303, 311. Removes 
across the ocean the points where their prices tend to converge, 215-6, 
240-1. Means uniformity of occupation in the weaker country, 212-3, 
215-6, 217, 235-6, 237, 238, 239-40, 242, 253, 295, 301-2, 303, 309, 311-3, 
318, 329-30, 334-5, 337-8. Involves a bad economy of the weaker nation's 
labor, 129-30, 211-2, 215-6, 235-6, 237, 254, 295, 298, 302, 303, 306, 311, 
312, 320, 332, 334-5, 337-8, 344, 354. Involves bad and wasteful farming, 
90-3, 214-6, 237, 239-45, 263. Involves an unfavorable balance of trade, 
206-8, 258, 260, 329-30, 334-5, 337, 339, 356. Rejected by great states- 
men : by Colbert, 269-70. By Napoleon, 271-3, 281-2. By Edward III., 
276. By Elizabeth, 277. By Cromwell, 277-8. By Frederick the Great, 
321-2. By Joseph II., 322. By Alexander I. and Count Nesselrode, 330. 
By Gustavus Adolphus (see Hausser's Period of the Reformation, p. 4551. 
By Count Ericeira, 334. By Fisher Ames, 344. By Gen. Washington, 
344, 345. By Alex. Hamilton, 27, 29, 344, 345. By Thomas Jefferson, 347. 
By James Madison, 350. By President Monroe, 351. By Henry Clay, 

• 351, 352-3, 353. By Daniel Webster, 352. By John C. Calhoun, 350. 
By Andrew Jackson, 243, 353. By Gen. Harrison, 354. Rejected by pro- 
gressive countries : by Greece and Rome, 267-8. By France, 269-75. By 
England till 1845, 275-81. By the English working classes, 288-9. By 
the Australian colonies, 294-7. By Belgium, 317-20. By Germany, 320-9. 
By Russia, 329-31. By Sweden and Denmark, 331-2. By Spain, 332-3. 
Adopted by England after five centuries of protection, 281-5. The act 



INDEX. 405 

of the middle classes, now to be judged by the working classes, 282-9. 
Adopted by Canada, 290-3. By Prussia temporarily, 323-4. By Russia 
temporarily, 329-30. By Portugal for one hundred and fifty years, 334-6. 
By the United States by default of legislation till 1824, 347-51. Again 
for political reasons in 1833-42, 353-4. Again partially in 1846 and 1857, 
355-7. Forced on Ireland in 1801, 301. On India in 1813, 310-3. 

Free traders, if consistent, oppose national education, 248-9, 371, 373, 395. 
And national post-offices, 248. Are too moral to engage in protected man-' 
ufactures, 247. Generally belong to the servile party in politics, 226, 294. 
Are liable, by reaction, to become communists, 265-6, Have no faith in 
the principle of nationality, 230-1. Their ablest men concede the tempo- 
rary expediency of protection, 249-51. Admit that protection creates no 
monopoly, 252. Seven of their objections to protection, 256-266. Are, in 
England, the middle class, 282-3. Are not open to argument, 287, 288. 
Their conspiracy with Napoleon III., 273. Their defeat in Germany, 324-5. 
In Belgium, 318. In Russia, 330. In Portugal, 336. Their defeats in the 
United States, 351, 354-5, 357-8. Their league with the Slave power, 357. 

Frontiers, Custom House, inside nations, 17, 322, 323, 324, 332, 333, 344. 

Fullarton, on Currency, 156, 166. 

Funding national debts, 191-2, 193, 229. 

Gee, o)i Trade, 342. 

Geography in education, 379. 

Gladstone, W. E., 96, 183, 187, 192, 273, 283-4, 287, 307. 

Goethe, 20, 37, 43, 254. 

Gold, why adopted for coinage, and when, 142-3. Its advantages and dis- 
advantages, 144. Probable effects of its demonetization, 27, 145. Its sup- 
ply, 145. Does not circulate in the East, 148. Its increase in the circula- 
tion and the effect on its value, 23, 148-9, 151, 207-8. English legislation 
about it, 165. (See Bullion.) French practice, 171. 

Goldsmiths, English, used to act as bankers, 153, 162, 163. 

Government, its development through the differentiation of function, 37-8, 
179-80. Its function to steer, 36, 225. Its sanatory responsibilities, 50-3. 
Its growing need of revenue, 180, 229-30. Its earlier methods of getting 
it, 180-1. Its methods of taxation, 181-90. Its debts, 190-3. Its trea- 
sury notes, 193. Its preparation for war in times of peace, 229-9. Its 
duties to other nationalities, 36, 39, 228-9. Its passivity as regards indus- 
try proposed, 18, 19, 223-31, 264-5, 289, 309, 355. That policy contrary 
to the Constitution, 224-5, 264-5. Its methods of discrimination in favor 
of home industry, 231-5. (See Tariff, Duties.) Its duty to the national 
domain, 48. Its duties to education, 180, 229-30, 366-7, 373, 395. 

Grain trade of Russia, 241,329-30. Of Sweden, 113, 332. Of Greece and Rome, 
267, 268. Of the West with Europe, 92-3, 200, 239-41, 241-2, 263. 

Greeley, Horace, 30. 

Greenback Party, theory of the, 194. 

Greg, W. R., 24, 53, 61, 64, 67. 



^06 INDEX. 

Gustavus Adolphus, 331. 

Hamilton, Alex., 27, 29, 173, 251-2, 344, 345-6. 

Hardware, American, 255. 

Harmony of interests, 29-30. Between capital and k.bor, 119-20, 121, 122, 
124, 129, 135-6. Methods to realize it, 135-9. Of agricultural and 
manufacturing classes, 220, 235-6, 241, 242-5, 263. Of producers 
and consumers, 215-6J 220, 251-2, 257, 258, 296-7, 327. In true com- 
merce, 197, 220. 

Health, duty of the state to promote, 50-3, 180. And education, 366. 

Hindrances to natural growth or progress, 28, 30, 118, 127-33, 170, 187, 
221-3, 259, 260-1, 263-4. 

History, its use in education, 381-3.' 

Home iudustry, 16, 40, 211-2, 215, 216-7, 225-6, 235-9, 240-4. 

Homer, 121, 368, 391. 

Homestead law, 240. 

Houses of the working class. 132, 260. In Philadelphia, 238. 

Hughes, Thos., 105, 137. 

Huguenots driven from France, 17, 271. In Germany, 322. In England, 
277, 278-9. 

Humboldt, A., 207. 

Humboldt, W., 324. 

Hume, David, 64, 149-50, 191. 

Hunter life, 49, 68, 71. 

Hunter, W. W., 60. 

Huskisson, 222, 283, 324. 

Imagination, its power, 263-4. 

Immigration into the United States, 237, 242, 291. 

Implements, agricultural, 70-1, 100. 

Impot proijressif, 189. 

Improvements in production, 57, 69, 72, 237, 250, 254-5. In machinery, 
127-8, 238, 254-5, 280, 281, 336, 346, 388-9. 

Incidence of taxation, 181-3, 185. Of protective duties, 332-5. 

Income tax, fairest in theory, 185. Practical objections, 187-9. In Eng- 
land, 185, 187, 189. In America, 188-9. 

Individuality the correlate of interdependence and close association, 40, 
216-7, 220-1. 

"Industrial partnerships" preferable to co-operation, 138-9. 

Industrial state, as conceived by Fichte and List, 27, 28-9, 367. Its nature, 
38. Its divisions, 40. (See Equilibrium of the Industries.) Communists 
make it everything. Free-traders nothing, 224-5, 264-6. National edu- 
cation regards it, 375, 384-94. 

Industry, Quesnay's view of, 18. Adam Smith's, 19. Fichte's, 27. Dis- 
tinctive character of modern industry, 72, 115, 127-8, 281, 345. As re- 
lated to money, 150, 151-2, 154-5, 207-9. Obstructed by wrong taxation, 
182-3. Its natural growth in variety, 19, 30, 90-1, 219-20, 259. 



INDEX. 407 

Inequality of condition, Ricardo accounts for, 22, 93-5, 117, 265. Carey on, 
30, 117-8, 265. Promoted by panics, 168, 173. By indirect taxes, 182-3, 
189. By free trade, 238, 260, 314, 339-40. 

Inflation of prices, 354. 

Ingram, Prof., 26. 

Inheritances, taxes on, 183. 

Instruments, the law of progress as regards, 124-6, 144, 198, 245-6. Money 
the instrument of association and exchange, 142, 144, 151, 154, 162. 

Intensive agriculture, 72, 87, 89, 237. 

Interference. (See Hindrances.) 

Interest on money, 151, 159, 162, 163, 165-6, 169, 172. 

Interest, what is a man's, 231, 257-8. 

Internal revenue, 183. (See Excises.) 

International exchanges : Smith and Say's theory, 19, 20, 205-6, 207-9, 260- 1. 
Ricardo and McCulloch's criticism of it, 206-7. The theory of Torrens, 
Ricardo, and Mills, 22-3, 209-1 0, 256-9. Some objections to it, 210-6, 256-9. 
No test of national prosperity, 217, 262, 274, 292, 301, 312, 332. 

Inventions, 238, 281, 388, 360. 

Iron: use in coinage, 148. Imported into mediaeval England from Nor- 
mandy, 72, 276. Yarranton would import the industry, 278. Its protec- 
tion, 1771-1834, in England, 280. Prussian and Belgian rivals the Eng- 
lish, 285-7, 319, 328. Belgian protection, 318. French, 275. German, 
326. In Ireland, 298, 301. In India, 259. In America, 210, 234, 255, 
342, 347, 350, 351, 356, 357-8. 

Jackson, Andrew, 174, 243, 353. 

Jevons, Stanley, 149. 

Jural state, its nature, 38. Its development, 179-80. Chief theme of early 
political philosophers, 267. National education regards, 375, 380-4. 

Justice or righteousness of the essence of the state, 34, 36-7, 225, 380-3. Is 
twofold, 37, 225. Is not all of morality, 383. Justice of war, 228-9, 259. 
"Justices' justice," 179. 

Karl the Great, 369. 

Kathedeisocialisten, school of the, 25, 26, 

Kingsley, Chas., 132, 288. 

Knox, John, 371. 

Kraus, C. J., 88, 323. 

Labor, the source of wealth, 16, 18, 19, 41, 114. Its development in method, 
49-50, 68-9, 70-2, 100, 115, 121-4, 127-8, 197, 219-20, 237-8. Its growth 
in power over capital, 74, 97, 124-6, 237-8, 265. It is most abundantly 
employed and best paid in the neighborhood of varied industry, 129-30, 
211-2, 235-9, 294-5, 301, 303, 305, 306, 311-2, 327, 337. "More labor is 
less eflScient in agriculture," 81, 88, 93, 94, 95. (See Co-operation, Indus- 
try, Wages.) 

Laissez faire, 270, 364. As a theory, 286, 289, 355. 

Land, the alleged monopoly of it, 22, 93, 95-6. Derives its value from labor 



408 INDEX. 

expended, 114, 125. The worst is settled first, 99-100. (See Settlement:, 
Much lies idle in England, 59, 82. Very little is farmed scientifically, 
58-9, 82. It supports a relatively scanty population, 78, 212, 213, 259. 
Is owned by a small and diminishing number of persons, 77-8, 82-3. In 
progressive countries it is owned by a large and increasing number, 72-3, 
86-90, 122. Duties of the state toward it, 48, 70, SS, 95-6, 304-7. (See 
Afjrictdtin-e, Farmers, Rent, Soil.) 
Land-banks in Europe, 163, 171-2. In the colonies, 172, 173. 
Land-acts of 1870 and 1881, 85. 
Landlords in Ireland, 84. 
Land-tax, raises rents, 184. Better than taxes on personal property, 185. 

English, 186. American, 185, 188. East Indian, 313-4. 
Land tenure, primitive, was communistic, 24, 73-4, 75, 90, 98-9. Feudal, 
74-5, 86-7, 88. In Scotland, 85. The Highlands converted into private 
estates, 85. Abolished in England at the Restoration, 77, 79, 186. In 
Prussia by Stein, 88-9, 122. The modern English and its failures, 75-83, 
212, 213. Does not account for the poverty of Ireland, 304-5, 
Language, and nationality, 34, 376. Two in Belgium, 317, 365. Language 

in education, 376-7. Of the English Bible, 384. 
Large estates in Saxony, 72. " Ruined Italy," 73. Their growth in Eng- 
land and Scotland, 77-83. 
Lassalle, 30, 117-8, 266. 
Laveleye, E. de, 24, 26, 72. 
Lavergne, M. de, 87. 
Law, John, 170, 271. 
Legal tender, 146-8. 

Legislation, its formal beginnings, S3. Its true progress, 35, 38. Industrial, 
presents nice problems, 225. Its true province, 30, 224-6, 258-9, 264-5. 
As to health and population, 52-3, 60-1, 180, 249. As to pauperism, 54, 
130-1. As to land, 73, 75, 77, 79, 86-7, 88-9, 90, 96, 99, 305-7. As to 
slavery, 89-90, 122. As to labor, 122-3, 130-1, 133, 136. As to temper- 
ance, 132. As to coined money, 146-8. As to banking, 155-6, 157-8, 
ie2-.S, 165-7, 169-78. As to revenue and taxation, 180, 181, 190, 229-30, 
313-7. As to national debts, 190-3. As to promoting home industry' 
210, 213, 223-8, 231-5, 239-40, 247-52, 255-fi, 259-61, 264-7. As to hin- 
dering it, 221-2, 270-1, 273-5, 289-94, 297-302. 309-12, 323-4, 329-30, 
332-7, 341-.'), 353-4, 355-7. As to education, 180, 248-9, 366-9 371-3 
384-5, 387, 390, 392, 395. 
Leslie, CJiflfe, 26, 78, 81, 117, 129, 130, 236, 319-20. 
Levees, 112. 
Licenses, 132, 181. 
Linen manufacture in Ireland, 130, 298-300. In England, 278, 279. In 

Belgium, 275, 319. In Germany, 328. 
List, Frederick, 28, 323, 325, 3.26» 328. 
Local centres, 311, 314. , 



INDEX. 409 

Lock-outs, 134, 198. 

London, 67, 151, 277, 389. 

London Quarterly Review on Turkey, 337-41. 

London Review, 286. 

Lotteries, 180. 

Ludlow, J. M., 137, 310-1, 314, 315. 

Luther, 372. 

Macaulay, T. B., 13, 67, 77. 

Macgregor, 335. 

Machinery, its introduction affects labor, 50, 57, 127-9, 345, 365-6. Has 
destroyed some local industries, 312, 317, 320, 336-7, 390. England pro- 
hibited its export, 281, 312, 317, 330, 337. Its accumulation in England, 
281. Invented or improved in America, 238, 281, 346. 

Madison, James, 1 74,*350. 

Magistrates, professional the best, 179. 

Maine, Sir H. S., 24, 99. 

Malthus, Rev. T. R., 21, 22, 24, 25, 53-69, 93, 94, 97, 118. 

Man, not to be treated as a thing, 11-12, 119-20, 121-2. His relation to 
Nature, 29, 41-2, 368. 

Manchester, 238-9, 280, 300. 

Manor, its constitution, 74, 98-9, 179. Its copy or roll (yotrdus), 74, 77, 276. 

Manufactures, Quesnay's theory of, 18. Adam Smith's, 19. Their natural 
growth, 219-23, 258-9. Benefit of their neighborhood, 90-2, 128, 129-30, 
237-9, 240-7, 262-3. Their destruction in Ireland in the reign of Williana 
III., 84. Effects of their absence, 40, 57, 90-3, 214*-6, 222-3, 227-8, 235, 
292, 305-6, 311-2, 330, 334-5, 336-41. Concentration in England, 212-4, 
280-1. Their history in Asia, Europe, and America, 267-364. In rela- 
tion to education, 387-95. (See Equilibrium of the Industries, Machinery, 
Protection.) 

Manure, needed, but wasted, 46, 71, 72, 92, 243, 244, 273, 317. 

Mark, the Teutonic, 33-4, 73-4, 197. (See Afanor.) 

Markets, their primitive character, 197. "Buying in the cheapest," 210, 211, 
215-6, 257-8, 292. Fostering a home market, 46-7, 224, 226, 241, 242, 243, 
244, 245-6, 255, 261, 301, 332. The competitions of the home market, 
226-7, 251-2. The trader's power over. (See Forestalling, Prices.) 

Mathematics in education, 378. 

Maurice, F. D., 28, 39, 137, 221, 372, 382. 

McCulloch, J. C, 23, 55, 57, 61, 166, 185, 191, 206, 207, 252, 335, 336-7. 

"Mercantile School," 16-7, 209. 

Metals, precious: their history, 142-52. Their use as money, 143. Our 
supply, 357. (See Gold, Silver, Money.) 

Metayer system of land tenure, 90. 

Method of economic study, 25, 31, 57. 

Middle class in England, 282-4, 287, 288. None in the South, 358. 

Military supplies, depend on manufactures, 227-8, 297, 345, 357-8. 



410 INDEX. 

Mill, James, 22, 54. 

Mill, John Stuart, 24, 25, 31, 51, 54, 55, 56-7, 95, 118, 12.4, 127, 150, 201-2, 
209-10, 249, 250-1, 266, 301, 303. 

Milton, John, 377, 378, 384. 

Mind, its growth limits that of numbers, 65-6. Mind and muscle, 127-8, 237. 
(See Culture State, Education.) 

Mirabeau, 18, 322. 

Mohammedan regard for trees, 48. Oppressive as rulers, 61, 67-8. Their 
bad finance, 189, 313, 316-7, 337-8. 

Money, its origin, nature and advantages, 142-4. Coined money, 143, 144:-5, 
148-9. (See Gold, Silver, Coinage, Metals Precious.) Paper money, 149, 
152-6. (See Bill of Exchange, Bank Notes.) Money of account, 153, 
156-62. (See Banking.) The instrument of exchange and of associa- 
tion, 143. The relation of its quantity to its purciiasing power, 149-52. 
Its supply at different periods, 16, 148-9, 207. Its plenty stimulates pro- 
duction, and vice versa, 151-2, 154-5, 208-9. Unequal commerce drains a 
country of its money, 151-2, 206-7, 209, 329-30, 334, 336, 338, 339, 356. 
Prohibitions on its export, 16, 17, 321. Unprogressive countries sometimes 
absorb it, 151, 166, 206. English theories about, 22-3, 23-4, 149, 156, 165, 
206-9. 

Monopolies as a source of revenue, 17-8, 180-1, 183, 271, 313-7, 322. "Mo- 
nopoly of land," 22, 23, 93, 95-6, 114. In trade, 223, 267-8. In banking, 
163, 169, 171, 174-5, 176-7. Protection does not create monopoly, 251-2. 
Its aim and tendency to destroy actual monopolies, 225-7, 295. 

Monroe, President, 351. 

Morality of a nation, 34-7, 39, 361-2, 380-3. Christian or individual moral- 
ity, 383-4. Its relation to celibacy, 56, 61, 65, 110. And to wages, 120, 
121. And to education, 374-5. 

More, Sir Thomas, 75-6. 

Morris, Robert, 172-3. 

Mountain districts often settled before the plains. Chap. VI., passim, 

Murdock, John, 86. 

Murphy, J. N., 301-2, 307-9. 

Music, a science and an art, 15, 23. In education, 377-8. 

Napoleon, 136, 158, 255, 271-3, 281-2, 318, 329, 346, 367, 387-8. 

Napoleon III., 273-4. 

Nasse, 24, 75, 98-9. « 

Nation (New York) quoted, 91, 178, 264. 

Nation : historical origin, 33-4. The modern form of the state, 33. Its true 
nature, 14, 34. A moral personality, 35-7, 380. Its vocation, 36, 225. 
(See Jural State.) Its progress, 37-8, 40. Its industrial existence, 38,40. 
(See Industrial St-ate.) Its self-preservation not selfishness, 39. Its right 
of "eminent domain" over its soil, 48, 70, 95-6. (See Land, Soil.) The 
territory of each is capable of feeding its people, 113, 217. Its unity is 
strengthened by variety of industry and individual freedom, and vice versd. 



INDEX. 411 

40, 216-7, 220-1, 223, 328-9, 341. Is wise to make sacrifices, 248-9, 226, 
292. Its war powers and duties, preparations, 227-8, 347, 357-8. Its 
peculiar financial policy, 229-30. Is ignored by the cosmopolitical school, 
19-20, 230-1. 

National banks, 176-7. 

National debts, 190-3, 229, 344-5, 353. 

National economy, 11, 14. 

National education, its policy, 365-7, 373-5. Its history, 367-73. Its proper 
shape and drift, 375-95. Its opponents, 248-9, 371, 373, 395. (See Edu- 
cation.) 

Nationalist economists; the "mercantile school," 16-7. Bishop Berkeley, 
26. Fichte, 27. Coleridge and Maurice, 27-8. List, 28-9. H. C. Carey 
and his school, 29-31. Horace Bushnell, 231. 

Nationalist policy. (See Protection.) 

Natural advantages of each country, 210, 258-9, 293. 

Nature. (See Man, Wealth, Value.) 

Navigation laws, English, 277-8, 300, 324, 341. 

Necker, 171, 191. 

Neighborhood of farm and factory benefits agriculture, 46-7, 90-3, 214-6, 
239-45, 263, 276, 303. Of diff'erent industries raises wages, 129-30, 211-2, 
235-9. Of producer and consumer diminishes the trader's profits and his 
power, 198-201. Neighborhood knowledge, 379-80, 386, 394. 

Nesselrode, Count, 330. 

New York, 173,238. 

Nickel in coinage, 148. 

North British Jievicw, 284-5. 

Opium in India and China, 206, 310-1, 315-6. 

Over-issues. (See Bank Notes.) 

Over-production, 214-5, 261. 

Owen, Robert, 136, 202. 

Panics, their nature, 161-2. In England, 163-4, 165, 166-8, 282, 349. In 
Scotland, 170. In France, 170, 171, 274. In America, 173, 174, 205, 354, 
357, 361. 

Paper-money, 152-6, 193-4. 

Parsimony, not always economy, 14, 119-20, 211, 235. The law of parsimony 
applies to instruments, 119, 144, 198, 245. 

Passivity, governmental, in regard to industry, 18, 19, 21, 22, 30, 210, 212, 
223-6, 264-6, 291, 321. In regard to popular misery, 54, 95, 289. 

Passivity of money, 22-3, 23-4, 149-52. 

Paterson, W., 162, 168. 

Patriotism in relation to national economy, 20, 39, 80, 83, 191, 212, 227-8, 
288-9, 328-9, 341. Its truest type, 39, 382. 

Patterson, R. H., 146, 149, 150, 156. 

Paul, 38, 221, 257. 

Pauperism, the Malthuslan view of, 22-3, 54, 116-7, 265. The true view, 30, 



412 INDEX. 

lU. In England, 83, 130-1, 212. In Ireland, 303, 304, 308. In Bel- 
gium, 88, 236, 320. In America, 238-9. 
Pearson, C. H., 101-7. 

Peasantry, 78, 80, 82, 82-3, 89. 

Peel, Sir Robert, 165-8, 183, 187. 

People's banks in Germany, 120, 366. 

Personal property taxed, 184-5. 

Philadelphia, 111, 172-3, 238-9. 

Phosphorus in the human frame, 67. 

Physical science in education, 378. 

Pilgrimages, sources of pestilence, 67. 

Pitt (the elder), 185, 186, 189. 

Plants, their geological history, 42-3. Their food, 42, 43-7. 

Platinum in Russian coins, 148. 

Plato, 14, 36, 378, 381. 

Pliny the elder, 73, 121. 

Plutarch, 381. 

Poorer classes, the statesman's problem, 115. Affected by indirect taxes, 
182-3, 189. Buy the dearest, 202. Poorer nation injured by unrestricted 
trade with a richer, 222-3. (See Free Trade.) 

Population : its growth the first condition of advance in wealth, 49-51, 70-2, 
100, 113-4, 198, 219. Duty of the state to foster that growth, 50-4, 366, 
380. Malthusian theory, 21-2, 53-7, 94, 95, 110. Its English critics, 24, 
53. Discredited by facts, 57-63. Is the parent of Ricardo's theory of 
rent, 93. And of the wage-fund theory, 116-7. Population is self-reg- 
ulative, 63-9. That of England, 58, 61, 62, 64, 101-2. Of Ireland, 58, 
59-60, 62-3, 109, 130, 302-3. Of Belgium, 57, 58. Of France, 61, 62, 64, 
123. Of America, 62, 64-5. 

Post-oflBce, 180, 184, 248. 

Poverty. (See Pmiperifim.) 

Power over nature, 29, 41, 49, 66, 69. Power to consume, the test of pros- 
perity, 217, 327. 

Premiums, 16, 231. 

Prices determined by cost of reproduction, 125. Their relation to the supply 
of money, 22-3, 23-4, 150-3, 207-9. When can the trader fix prices, 200-2, 
245, 294, 296-7, 356. Raised temporarily, but ultimately reduced by pro- 
tective duties, 233-4, 248, 251-6, 280, 327, 345, 346, 355. Of labor. (See 
Wages.) 

Primogeniture, right of, 79. 

Prison labor, 131, Its effect on the working classes, 131. 

Production, Quesnay's theory, 18. Adam Smith's, 19. Its development, 
68-9. Promoted by the plenty of money, 151-2, 207-9. And by ma- 
chinery, 127-8, 281. 

Profits: their inequalities, 19. Diminished by waste, 120, 138. Profits of 



INDEX. 413 

farming, 72, 91, 214^6, 241, 242-7. Of banking, 155, 175. Of the trader, 
198-203, 245-6. Of manufacturing, 247, 252. 

Progress is normal, 19, 29-30, .34-5, 57, 69, 113-4, 125-6, 265-6. Its indus- 
trial goal, 27, 29, 40, 115, 220, 259. Its method. (See Differentiation of 
Function.) 

Prohibition of imports, 231, 248, 272, 276, 279, 280, 283, 284, 310, 322, 323, 
324, 332, 333. Of exports, 16, 276, 281, 298-9, 312, 317, 322, 324, 330, 337. 
Of free contract, 96, 305-7. 

Proletariat, 61, 73, 115. 

Prolongation of life, 67. 

Prophets, the Hebrew, 381-2. Isaiah, 73. 

Protection is natural resistance to an unnatural status, 212-4, 226-7, 259. 
Its method, 23J-5. It benefits labor, 231-9, 129-30, 211. It benefits ag- 
riculture, 90-3, 214-6, 239-45. It makes commerce equitable, 245-8. Is 
not irreligious and selfish, 364. Its eflFect on manufactures, 248-56. Seven 
common objections to it answered, 256-66. It has the sanction of the 
greatest free traders, 249-51. It is a measure of national defence, 227-9, 
345, 347. It is the policy of progressive nations, especially in their youth, 
226-7, 273, 275, 294-5, 317, 328. Is a great promoter of commerce, 362. 
It does not create monopolies, 251-2. It has the sanction of the U. S. 
Constitution, 224-5, 265, 344. Its history in Europe, 267-80, 300-1, 317- 
333, 336. In America, 344-364. In Australia, 294-7. 

Prudhommes, Conseih de, 136. 

Publicans, 190. 

Purchasing power of money, 22-3, 23-4, 148-52, 217. Of wages, 63, 123, 
125, 237. 

Rack-rents in Ireland, 84, 99, 304, 305. In England, 76, 78. 

Railroads, subsidies, 240. Growth in India, 259. 

Rainfall, aflTected by trees, 47-8, 104-5. 

Rapidity of social circulation, 68, 144, 152, 156, 160, 199. How promoted, 
150-1, 154, 198, 204-5, 205-6, 260-1, 309. How checked, 182-3, 223, 292-3, 
301, 307-8, 311-2, 337-8, 

Rate of increase of population, 53, 61-3, 66-7, 94, 303. 

Rate of wages, 116, 117, 119, 123-4, 129-30, 133-4, 140. 

Raw materials : their export unprofitable, 91, 214-6, 241, 314. Their pro- 
duction protected, 239-40, 256, 346. Progressive countries cease their ex- 
port, 246, 328. The relation of their price to that of manufactures, 241. 

Raw material associations [lioh-stoff-vereine), 139-40. 

Reciprocity between England and other countries, 312, 324, 330-1. Between 
Belgium and Holland, 318. Between Austria and Germany, 325. 

Reformation, 76-7, 288-9. 

Rent, its supposed origin, 22-3, 93-5. Its relation to the whole product, 
96-8. In primitive society is customary, not competitive, 24, 74-5, 98-9. 
In England, 74-5, 76-7, 78. In Ireland, 304-7. 

Reproduction : its cost determines prices, 125-6. 



414 INDEX. 

"Reproductive consumption," 256. 

Responsibility of the capitalist for rate of wages, 120-1. Of governments for 
the public welfare, 37, 224-5, 264-5. (See Education, Government.) 

Resumption. (See Specie Paymeuts.) 

Revenue: growing need of, 179-80. Earlier methods of getting, 180-1, 186, 
276. Modern methods. (See Excises, Customs, Income Tax, Taxation, 
Land Tax, Tariff.) Should cover current expenses, 190-1. Revenue 
tariffs objectionable, 232, 290-1, 347, 350-1, 354, 355-7. Protective tariffs 
yield a large revenue, 233, 333, 353, 355. How raised in England, 186, 
187, 291. In Germany, 325-7. In India, 313-7. In Turkey, 337, 339. 
In Russia, 90. 

Revolutions are abnormal, 34-5, 230. English, 123, 162, 186, 298. French 
of 1789, 86-7, 171, 271. American, 172, 193, 281, 343. 

Ricardo, 22, 23, 24, 25, 93, 114, 118, 191, 206, 207, 209, 273. 

Rights, natural in their relation to the state, 34, 36, 223-4. The supposed right 
of free trade, 223. The imperfectly defined rights of the feudal land ten- 
ure, 74-5, 79, 88-9, 306. 

Risks, the farmer's, 91, 211-2, 214, 244-5. The trader's, 203-4. The manu- 
facturer's, 215. 

Rivers, 47, 48, 100, 105, 112, 113. 

Rogers, Thorold, 71-2, 74, 123, 212-3, 223, |51, 252, 395. 

Roscher, Prof., 26. 

Rossi, 21, 249-50. 

Rotation of crops, 46, 72, 74, 92, 243-5, 385. 

Rouleaux, Prof., 359. 

Sacrifices, national, their wisdom, 201, 226, 248-9, 253, 286, 292, 295, 318, 
366. 

Sailors, 216, 236, 246, 259. 

Saint Simon, 118. 

Salt, 240, 315, 347. 

Saturday Revieio, 31, 364. 

Savage state, 29, 30, 38, 49, 157. 

Say, J. B., 20, 21, 205, 207, 249, 272. 

Schultze-Delitzsch, 30, 31, 117-8, 139-40, 203, 266. 

Science, its nature and stages of development, 11-12, 14-15. 

Scott, Sir Walter, 122, 154-5, 170, 384. 

Selfishness not chargeable on patriotism, 39. It is short-sighted, 48, 51-2. 

Senior, N. W., 23, 24, 53, 56, 78-9, 97, 288. 

Serfdom, mediasval, 74, 122. Abolished in Prussia by Stein, 88-9, 122. In 
Russia, 89-90, 331. 

Settlement of the soil : its true law, 99-101. Exemplifications of the law, 
Chapter VI. 

Several. (See Community.) 

Sheffield, 62, 233-4. 

Shepherd life, 49, 68, 71. 



INDEX. 415 

Shipping, English, 277-8, 324. Prussian, 324. Spanish, 333. American, 

347, 349, 363, 364. 
Silica in the soil, 45. 
Silk production and manufacture in France, 269, 270. In China, 206. In 

England, 246, 279, 284, 285, 289. In Ireland, 300. In Germany, 328. 

In Russia, 330-1. In America, 354. 
Silver in coinage, 142-52. Demonetization of, 146-8. Absorbed by the East, 

148, 166, 206, 313. 
Sinking fund, 192. 

Slavery, European, 104, 121-2. American, 352, 355, 357. 
Small farms, 72, 90. 
Smiles, Samuel, 271, 275, 277, 279. 
Smith, Adam, 18, 19, 20, 26, 29, 80, 99, 124, 165, 191, 205, 206, 249, 260, 266, 

269, 270, 323, 324, 329-30. 
Smith, E. Peshine, 30. 
Smith, Gerrit, 248, 373. 
Smith, Sidney, 186-7. 

Smuggling, 184, 232. In Germany, 323. Through Portugal into Spain, 335. 
Socialism, 25, 30, 96, 117-9, 136, 199. 
Social science, definition, 11-15. Younger than national economy, 14—15, 

267. Its history, 15-31. 
Society Co-extensive with the human race, 13. Human welfare depends on, 

13-14. Its general development, 32-4, 36, 38. Its industrial development, 

29-30, 38-40, 49-50, 68-9, 70-2, 99-100, 142, 144, 197-S, 216-21. 
Soil : man's dependence on it, 41-2. Its history and composition, 42-5. Its 

exhaustion, 46-8, 92, 243-4, 304. Rarely well cultivated, 58-9, 385. (See 
~^ Agriculture, Farming, Land, Settlement.) 
Solomon, 73, 119, 202. 
Specie payments, suspended in England, 163, 164. Resumption in England 

in 1821, 164. Resumption of, in the United States, 194. Suspension in 

1837, 354. 
Specific duties the best, 231-2, 233. Preferred in England, 284. In Ger- 
many, 326-7. In Portugal, 336. (See Ad valorem.) 
Spectator (London), 132, 255, 287, 306, 307, 313. 
Speculation and the credit system, 204. In England, 164, 165, 282, 343-4, 

349-50. In America, 173, 174, 353-4, 357. In France, 170. 
Spencer, Herbert, 24, 37-8, 53, 66, 69, 219, 248, 371. 
Stamp duties, 183. 
Standard of value, 148-9. 
State, the tribe and the city its ancient forms, and the nation its modern, 

32-3. Exists jiu-e divino, 35-6. Its duty to industry, 30. (See Go&ern- 
d ment, Nation.) 
Steam, adapted to small establishments, 128-9. Watt's invention, 128, 

281. John Fitch's, 216, 281. Steam-power comparable to paper-money 

152. 

\ 



416 INDEX. 

Steel, English, 233-4. American, 256. 

Stein, 88, 122. 

Steuerverein, 325. 

Stowe, Harriet Beecher, 86. 

Strikes, 133-4. In Philadelphia, 238. 

Subsidies, 240, 364. 

Sugar, 284. (See Beet Sugar.) 

Sully, 269. 

Suspension. (See Specie Payments.) 

Swift, Dean, 183, 299, 302. 

Syme, David, 200, 226-7, 295, 296, 297. 

Talleyrand, 294. 

Tariffs and their methods, 231-5. (See Ad valorem Duties, Incidence, Specific 
Duties.) Tinkering the tariff, 190, 234, 247. " A tariff and internal im- 
provements," 240. Not " sectional " in their purpose, but national, 263-4. 
Revenue tariffs, 232, 290-1. French, of 1664, 269-70. Of 1786, 271. Of 
1815-60, 272-3, 282. Of 1861, 2743-5. English, of the seventeenth century, 
278, 279. Of the eighteenth century, 280. Of 1819, 280, 283. Of 1832, 
1845-6, 1851, and 1853, 283-4. Of 1861, 284, 285. Canadian, 290-1, 313. 
Australian, 294-7. Irish of 1699, 299. Of 1783-1801, 300-1. Of 1808, 301. 
East Indian of 1813, 310, 312. Of 1857, 1859, and later, 255, 313. Belgian, 
of 1844,-318. German of last century, 322. Of 1813, 323. Of 1818, 324-6. 
Of 1843-5, 326. Of 1864 and 1879, 329. Of the Steuerverein, 325. Bussian 
of 1820 and 1822, 330. Of 1830 and 1869, 330-1. Swedish of 1824, 332. 
Spanish of 1722, 332. Of 1778, 333. Of 1845 and 1869, 333, Portuguese of 
1684, .334. Of 1703, 334-5. Of 1837 and 1841, 336. Turkish, dZ7. Amer- 
ican of 1789 and 1790, 346, 358. Of 1812, 347, 350. Of 1816, 350-1. Of 
1824,347,351-2. Of 1828, 352-3. Of 1832, 353. Of 1833-42, 353. Of 1842, 
355. Of 1846, 355-6. Of 1857, 357. Of 1861-9, 275, 357. Of 1867, 256. 
Of 1869, 261. Effect of the present protective tariff in the United States, 
358, 360. 

Taxation the modern source of revenue, ISO, 181. Points in it? economy, 
189-90. Its incidence, 182. Direct and indirect sorts, 181. Indirect 
taxes objectionable, 181-3, 186-7. Yields most when lightest, 183-4. 
Direct taxes, 184. Capitation tax, 184-5. Taxes on real and personal 
property, 185-8. Taxes on income, 185, 186, 187-8. English taxation, 
185-7, 189, 229-30, 291. Canadian, 291. East Indian, 313-7. Russian, 
90. Spanish, 183, 268, 332. Turkish, 337-9. American, 183-5, 188-9, 
195, 196, 229-30, 240. 

Tenant-right, 84. 

Tennyson, Alfred, 213, 217, 228, 254. 

Textile fabrics, once imported by England, 275, 276, 309. Their manufacturf 
begun and protected, 277, 279-80. Their manufacture in France, 270, 
285. In India, 309-10, 312, 313. In Belgium, 317, 319. In Germany, 



INDEX. 417 

326,328. In Russia, 330-1. In Denmark, 211, 332. In Portugal, 334, 
336. In Turkey, 336-7. In America, 342, 347, 350, 357-8. 

Thiers, Adolph, 264. 

Thornton, W. T., 24, 117, 125, 133-4, 304. 

Thorp, 73, 74. 

Tooke, Thomas, 23, 24, 156, 207. 

Torrens, Col., 166, 209. 

Trade. (See Commerce, International Exchange.) 

Trader, his function and services, 197-8, 205, 245. His power, 198-9, 201-3, 
245-6. His speculations, 199-200, 

Trade spirit described by Coleridge, 27, 79-81. Its relation to war, 229-30, 
And to education, 372. 

Trades' unions : their origin, 133, 134-5. Their success, 117, 133-4. Out- 
lawed, 130, 133. An exotic in America, 135. 

Transportation, an unproductive and laborious employment, 216, 217, 246, 
259, 274. Its cost an unequal tax, 214, 215, 241, 245-6, 341. How to 
avoid paying it, 245-6, 259, 263. 

Treasury notes, 194. 

Treaties of commerce : English with France, 270, 271, 273-5, 284. Belgian 
with Holland, 318-9. Austrian with Germany, 325. German with Eng- 
land, 324. Portuguese with England, 334-5. Turkish with France and 
England, 337. American with England, 346. With Canada, 293-4. 

Trees affect rainfalls, 47-8, 101-2, 105. Their sustenance, 44-5. One obstacle 
to the settlement of the best soils, 100, 101-2, 104-5, 105-6, 113. 

Tribe, grew out of the family and into the city or nation, 32-3, 381, Its com- 
munistic land tenure, 73-4, 98-9, Its jural and industrial methods, 68, 179, 
219, Its poverty, 59-60, 68, 71, 102, 107, 109, 219. 

Turgot, 18, 171, 208, 271. 

Twiss, Dr. Travers, on Colbert, 269, 270. 

Tyndall, on industrial education, 390. 

Ulster, Scotch settlers in, 83. 

Uniformity of occupation marks a low industrial status, 37-8, 40, 216-7, 223, 
261, 294, 295, 301, 305, 306, 335, 338. Is associated with famine, 59, 60, 
302-3, 312. 

University, 368, 369-70, 372. 

Usurers, 338, 339, 340. 

Utility not value, 41, 113-4. 

Value, its nature, 41, 126. Values diminish with growth of society, 125-6. 
Of land, 114) 125. Of gold and silver, 145-9. The trader adds to value 
rather than to wealth, 198-9, 245, 

Varied industry. (See Farmer, Labor, Differentiation of Function, Protec- 
tion.) 

Vegetable kingdom feeds man, 42, Its development, 42-3. Its sustenance, 
43-5. Vegetables in England, 72, 101, 277, When profitable as a farm 
crop, 92, 243-5. 
27 



418 INDEX. 

Venice, 157-8, 161, 228, 275. 

"Villeinage in mediaeval Europe, 74, 89, 99, 122. 

Von Maurer, 24, 95-6. 

Wage-fund theory, 22, 24, 116, 133-4. 

Wages are labor's share of the joint product of labor and capital, 115-6, 137. 
English theory of a natural and necessary rate, 21-2, 24, 54, 116-8, 119, 
133-4, 265. And of their equality, 19, 118-9. They are highest in the 
neighborhood of varied industry, 129-30, 235-9, 260. Trades' unions 
have raised them, 133-4. Attempts to abolish the wages system, 25, 118, 
136-8, 264, 265. Or to modify it, 138-9. The vp^ages of women, 140. His- 
tory of wages in England, 74, 83, 122-3, 124, 128, 129-30, 130-1, 133-5, 
136, 137, 138, 211-2, 236, 288. In Ireland, 63, 130, 236, 302-3. In France, 
97-8; 123. In America, 124, 128, 138, 235, 236-7, 238-9. 

Walker, Prof. F. A., 26. 

Walker, Hon. Robert J., 355. 

War a "check" on population, 54, 60, 62. War and debts, 190-3. Varied 
industry a preparation for it, 227-9, 347, 357-8. War is not the worst of 
national calamities, 192, 226, 228-9. 

Warfare, industrial, its methods, 201, 212, 222, 252-3. Instances, 263, 296-7, 
301,347-50,351. 

AVashington, George, 344-5. 

Waste lands in England, 59, 82. 

Water : its value, 41, 69. Its utility, 41, 42, 63. Its circulation in nature, 
47-8, 100, 102. 

Watt, James, 281, 388. 

Wayland, Dr. Francis, 25, 265. 

Wealth defined, 41, 49. Its discussion by the economists, 18, 19, 20, 23, 27, 
28, 29, 30. The tendency to attain wealth is natural and normal, 29-30, 
67,265-6. The conditions of its growth. {See Labor.) 

Webster, Daniel, 351, 352. 

Wells, Hon. David A., 25, 262. 

" Wet prairies," 112. 

Whale fishery carried on by co-operation, 138. 

Whately, Archbishop, 55. 

Wheat, its yield in England, 68-9, 71, 76, 82. Its excessive cultivation in 
the West, 92-3. (See Food, Grain Trade.) 

Whitney's cotton gin, 254, 281, 346. 

Wilsou, James, 313. 

Woman, in primitive stage of society, 197. Hours of work in factories, 51. 
Woman's wages, 124, 337. Woman's work, 140-1. 

Wool production in England, 275. In Ireland, 298. In America, 256, 342. 
In Australia, 294, 295. 

Woollens, manufacture of, in England, 276, 277, 279, 280, 348. In Canada, 
291. In Australia, 297. In Ireland, 298-9, 301. In France, 269, 276. 



INDEX. 419 

In Germany, 328. In Russia, 331. In Portugal, 334, 336. In America, 

266, 342, 347, 351, 357-8. 
Yarranton, Andrew, 16, 278. 
Yeates, Dr., 336. 

Yeomanry in England, 76, 77. Its decline, 78. Growth elsewhere, 86. 
Young, Arthur, 86, 109, 124, 207. 
Zu/lverein, 282, 325-9. 
Zumpt, 60. 



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